When a student is eligible for full Pell, as I was, their budget is generally the ~$6k Pell grant + the $5500 federal student loan + $3k summer work earnings + maybe $2k from parents. That’s roughly $16k/year which is usually enough to cover room and board. Students with this type of budget who want to go to residential college need to search out places that offer tuition grants for their stats. That can work for them because the aid crosses state lines. But being poor is hardly a plan.
Families whose income is modest but is still over the Pell income limit have more serious limitations. That extra $6k grant that you can spend anywhere you want makes a huge difference. You can find residential colleges with a net cost of $16k for an average stats kid, but it’s not so easy to find one for $10k. Even in states that offer need based grants to residents there can be a gap of thousands of dollars.
Families should search broadly for options, but be realistic. If your family is eligible for full Pell then OP’s plan might work for you, but if you’re not Pell eligible the landscape will probably look very different.