OP, I would look very closely to your local school (do you live in or near Anchorage to commute)? If they offer your degree, chemistry. Do they offer ChE? Are you wanting to get a graduate degree? Lay the foundation, getting as much education as cost-effectively as you can for UG degree. You say with merit scholarships at U of AK-Anchorage you potentially can have all the cost of your education covered - great!
Just gaining transportation to an out of state school eats up money a lower income student cannot qualify for. Then there are all the adjustment problems - when one has money, they can overcome adjustment issues being farther from home/family.
Don’t know if your family size and income would qualify you for additional money like Pell Grant.
It sounds like your family is trying to make good decisions for the family. I get the impression you are the oldest?
The T1 diabetes can have you with proper continued medical care and stability with your current healthcare providers and insurance coverage.
Our family income is higher, and # of children is lower, but both my kids used merit at in-state schools and are getting their UG degrees there. We parents are at peace financially. We have a local in-state university choice that many friends’ kids utilize to save on room and board costs.
Look at what students have done from your area that have gone off (those with stats like yours) and discuss with your school GC.
If you can qualify for free applications at some of the schools you want to pursue that may work out for you financially (I am assuming you are willing to take out the student loan amount you can, $5700).
You are smart to start looking hard at this now. I think your parents want you to process the financial information so that you can direct your energies in the best directions.