I don’t see something wrong here, and although I can’t see inside my neighbors checkbooks, I daresay the OP’s dilemma is extremely common. One acquaintance who bragged about what a great rate she got on a HELOC to paint her house. (You take out a loan for basic home maintenance?) One family who gives a brand new Jeep to the kid who is turning 18 but is constantly trying to figure out if they can reduce their auto insurance by $100. (well, the demographics are not in your favor. Teenage boys are expensive to inure). Neighbors who own a vacation home but their kid ended up commuting to the local, non-flagship public U which did not have the major he wanted because they qualified for zero aid but were unwilling to trim their lifestyle or cut down on travel.
OP-- like with everything else in life- figure out what’s important, what’s not; what is “worth paying for” in you and your wife’s eyes and what’s not, and then come up with a financing strategy that works with your kid’s abilities, profile, interests and talents.
I am sympathetic- I have relatives who had a very talented child (ballet, not sports) and people on the outside really have no idea how expensive top notch training is for a kid when the experts are advising “go for broke”. So travel time and costs, training, dance opportunities with companies out of the area- this stuff adds up pretty quickly when you’ve got a kid with real talent (and the passion and hard work to maximize the talent). So it isn’t easy balancing the needs of all your kids simultaneously.
But do a hard look and a draconian cutback NOW before that first tuition bill comes in and before your kid has fallen in love with an option which is simply not affordable. It is MUCH easier to have a growly teenager for a few weeks this May than it is to face a bare bones budget for 15 years because you threw caution to the wind or figured “the money will turn up”.
You’ve got three buckets. Past earnings which are now in savings or investments and available for college. (not retirement accounts and not your emergency fund). Current income- how much can you divert to tuition by cutting back. Future income- how much can you comfortably take on in debt and pay down over time. I have seen virtually every scenario known to man and can promise you- everyone is MUCH more generous spending future income than they are past income.
And that tells you something. People understand how tough it is to sock away $5k or 10K for their emergency fund. People understand how tough it is to keep up with auto-withdrawals on your retirement instead of taking the family to a warm island for a long weekend when the weather is cold and snowy and dreary. And we all know the frustration of having a broken muffler or refrigerator take the part of your paycheck you were planning to use for “fun” and deploy it to Midas or Best Buy.
But if you are prepared to be generous in assuming how thrifty you are going to be in the future I can promise you one thing- if it were that easy you’d have done it already. There are people making comfortable middle class salaries who have assets that would astonish you. They get a raise but don’t change their lifestyle. They get a bonus and it goes right into a safe, low fee index fund. They win a big screen TV at the local fire station’s pancake breakfast and they return it for a credit on their Mastercard. They are living in their starter house or starter condo with the furniture they inherited from Aunt Blanche and it doesn’t bother them. Their kids play outside for recreation, and a “big night” is inviting friends over for chili and homemade brownies.
OP- this is not you. Come to terms with that now. Can you save? Absolutely. Are you going to be able to cut back your lifestyle so significantly as to make a Parent Plus loan a good idea financially? You tell us.