We had a very similar situation to you. I have heard this referred to as the “donut hole” of families too rich to get need based financial aid and too poor to be comfortable paying $75,000 or $80,000 per year per child. For academically very strong students master’s degrees or some forms of doctorates (DVM comes to mind in our case) adds additional potential expense after a bachelor’s degree. Having spent an entire lifetime being frugal does indeed add to this dilemma, both in the sense of having money in the bank and in the sense of not having the personality to want to spend every dollar that you have in the bank. Being older parents can also hurt in that we could not afford to take on debt planning to pay it back after retirement.
We were able to find very good universities that were somewhat affordable at a cost of about $40,000 or less per year (half this in some cases). However, they were not ones that play football in the Ivy League, and were not the top New England LACs (which one daughter would have been competitive for as the #1 top student in her high school). Some were in-state public schools. Some were universities that gave good merit based financial aid (including a few out of state public universities). Some were in Canada.
There are a lot of universities that offer very strong academics. You do not need to attend Harvard, MIT, or Stanford to get a very strong education. I have been very impressed with the opportunities that both daughters have gotten at universities that are not quite as famous. This has for example included writing a grant proposal and winning a government grant to do research over the summer. It is not just Harvard students who get to do this.
I know several hiring managers who have definitely noticed that many of the best candidates are graduating from in-state public universities. They go there because they can afford it. Four years later we hire them. We used to hire a lot of MIT and Stanford graduates. Now we hire mostly graduates from public universities and from universities outside of the US (which are most likely also public).
To me the main point is to recognize that you do not need to attend an “Ivy League or equivalent” university to get a great education.