People make all sorts of dumb financial decisions. Some are small-- a few hundred bucks a year in over-insuring. Some won’t have ramifications for years- like not updating your beneficiaries for your retirement accounts so that your (now hated) ex-spouse gets everything when you die. Some are stupid but seem rational- paying for dental insurance, or vision insurance, when you know it will never pay out- but it feels “safe” to have it. Some are made out of ignorance- like assuming that it’s too expensive to make a will-- “but my kids know what my wishes are”.
And some are like the OP’s situation- dumb on so many levels that it’s hard to know where to start. I’ve seen some of these geniuses- their kid ends up at a college that doesn’t meet full need, really doesn’t care how you’re going to pay for it because they offer a token merit aid award to everyone they admit. And you’ve given up years of income in the process. Or kid decides college isn’t for him- but he’d love 10K in seed money to open a landscaping business- and already has customers lined up based on his years of lawn-mowing and leaf raking- but the 10K isn’t there because everyone assumed “financial aid will pay for college” so no need to save. Or the OTHER parent loses his/her job and now the family has two unemployed adults-- there is no financial aid at Stop and Shop or the gas station.
But like I said- people make dumb decisions all the time. I live in a town where after 2008 there were couples where BOTH lost their jobs (one worked at Bear Stearns, the other at Lehman), their house was immediately underwater when property values dropped dramatically, AND their retirement savings were tied up in the stock of their own companies. (now almost worthless). College was the least of their worries…