There's a theory that the nihilists stole the Dude's car to look for the money. They didn't find it (suitcase was removed), so they left it lodged against an abutment. Larry's teacher, as most teachers in LA, is a homeless vagrant, who slept in the car, used it as a toilet and moved on. He had the students' graded papers with him, so he wiped himself with a random one, in this case, little Larry's social studies homework. Since he is a dunce, he will not miss it.