what is Walter 's interaction with his classmates & Ms Caoline? What causes him to refuse to take money from Ms Caroline?

Walter keeps his distance from everyone. He won't take money from Miss. Caroline because he'd never take money from anyone (nor would anyone in his family).

As seen in the first chapter, where a person's identity is greatly influenced by their family and its history, this chapter again shows that in Maycomb, a child's behavior can be explained simply by his family's last name, as when Scout explains to her teacher "he's a Cunningham." Atticus says that Mr. Cunningham "came from a set breed of men," which suggests that the entire Cunningham line shares the same values. In this case, they have pride: they do not like to take money they can't pay back, and they continue to live off the land in poverty rather than work for the government (in the WPA, FDR's Work Projects Administration). Thus, in Maycomb County, people belong to familial "breeds," which can determine a member's disposition or temperament. All the other children in the class understand this: growing up in this setting teaches children that people can behave a certain way simply because of the family or group that they come from.