If the parents are willing to co-sign the loan, that’s the whole ballgame. Hard to judge where they are coming from.
A 40K EFC, including room and board + books, is a pretty sweet deal for a NESCAC (which I think is a more inclusive term than Little Three.) And, Parent-plus loans are not that unusual for even the most well-heeled families. If the parents are willing to co-sign a loan for three-quarters of the cost of attendance, they may be indicating that there is a family asset that they are not willing to dissolve just yet. Perhaps, they are thinking it will accrue in value at a faster rate than the debt service on a loan (I mean, it’s Texas. Who knows?)
OTOH, they may just be naive. Either way, I see the OP shopping for North Face outerwear in the near future.