This is really starting to sound more like a case of “keeping up with the Jones” than anything else and I’m a bit surprised your friend shared such details about their financial situation with you.
Most full pay kids that can get into these very expensive schools can get substantial merit money at other schools and I’m sorry but the line “but my little snowflake doesn’t want to go to any of those schools” doesn’t cut it with me. If parents’ want to give up their current life style, burn through their retirement savings and have their kid start off life with massive student loan debit, more power to them! It’s their choice, just don’t make that decision and then complain about it! If you friend is in TX they likely turned down UT Austin which is very affordable for in state even at full pay, not to mention schools like UT Dallas where they could have gotten full tuition plus (full ride for NM).
My advice too your friend is it to get tuition insurance and if the parents have cosigned any loans make sure the kid has life insurance.
Oh, and we cut out cable TV and switched to digital streaming and are saving $100 a month maybe they could do that too to give their kid more pocket change?