This paper investigates how educational services can serve as transformative mechanisms in addressing illiteracy and chronic poverty among street children in urban areas of Pakistan. Drawing on the Capability Approach and using Kleine's (2013) Choice Framework as an analytical lens, the study examines how free educational tuition delivered in informal park-based settings contributes to expanding children's substantive freedoms and empowerment. The research is grounded in a qualitative case study that combines semi-structured interviews with ethnographic observations, including participatory involvement by the researcher. The findings highlight two key contributions. First, the study demonstrates how free-of-cost and flexible educational services, coupled with strong mentorship roles, create the necessary conditions for capability expansion - removing barriers related to time, financial resources, and social constraints. Second, the analysis shows how such interventions influence both the intrinsic and instrumental dimensions of well-being, enabling children to re-enter formal education systems, build psychological resilience, and access improved socioeconomic opportunities. By capturing how agency and structure interact across the four dimensions of choice - existence, sense, use, and achievement - the paper offers a context-sensitive analysis of how educational services may create pathways that contribute to disrupting intergenerational poverty under specific structural conditions. The study contributes to both Transformative Service Research and development literature by offering a context-sensitive understanding of how education, when designed around real-life constraints, can promote social inclusion, structural change, and longterm empowerment in marginalized communities.