Honestly, I am not a fan of you have X and if you don’t use it you can have it for house money or starting a business. I think education is paramount and so therefore I would incent kiddos to spend the money as needed and for the school they want. That includes making concessions based on family funds. You cannot send a kid to a 60K school by taking out a second mortgage. Maybe in that case the family has to consider other options. I’d also expect them to work. ( Also not a fan of parents paying for small items). In terms of merit aid, no that goes into the family pot. It isn’t a lottery ticket.
Graduate school is a tough one. It’s a rare parent who has multiple kids who can send them all to college paid for and still have money for retirement and grad school for each. Even though we could do it, we won’t. At some point, the kiddo has to have skin in the game. You act differently when you want something and earn it. I might make a concession for medical school (since it is so expensive and such a long road) but it would be based on many factors and open and honest communication. It would also likely be a loan on better terms than the market with a part loan/part gift ( keep skin in the game but make sure crushing debt isn’t an issue).