Definitely a personal decision. Is LAC worth more than State U? Is it worth $30k more? To YOU?
If you don’t have the money, then it is an easier decision. “We can contribute up to $20k per year, so you can go to State U for free, you can apply to these other schools and go IF you get merit.” The line can be a wiggly one too, that you are willing to pay more or borrow more for schools you think will be a better fit or offer other advantages, but not willing to pay more for a school just because it is near the beach or has easy access to skiing. I did set an amount, but needed to increase it a little for one child and was able to come in under that budget for another. Wiggly line.
People really do make these decision all the time. Should they buy the very expensive house in the good school district? Should they buy a cheaper house in a good, solid district and then be able to afford other things for their kids, like sports teams and vacations to cultural places? Both have advantages and disadvantages.