The reality is you need to discuss with your daughter her goals: i.e. major, school, summer internship/job aspirations. There is not much you can do to game a financial aid system for top tier schools. I graduated from 2 ivy league schools for undergrad & masters degrees. I took every scholarship, grant, workstudy opp, and internship I could. The price for these places goes up roughly $2.5-$3K a year and you’re looking at a cost of $55-60K all-in before grants, scholarships, and the like. So realize per your savings and cash flow estimates, somebody is taking out a loan in the form of a student loan or heloc to go to one of these places. (Caveat, unless she’s a top athlete. This may lead to some extra help, but Ivy’s don’t give ‘athletic scholarships’, only merit/need based. This means, they’ll find extra money if she can bring All American honors/championships, but it will pale in comparison to what a state school would offer).
The truth is your undergraduate does not matter that much as long as you do well. Most Ivy League schools are thought highly of for their graduate programs. An MBA from Wharton means more than an undergrad. Thus, it's better to go to a less rigorous school and do great than be mediocre at an Ivy League school in the eyes of the Master’s programs.
Everything below is assuming she's a genius, extremely hard worker, who will graduate magna cum laude (3.7, A- or above at most Ivys) in a major that leads to $100K+ first year salary. If there are any doubts about this, then DON'T GO TO AN IVY LEAGUE SCHOOL.
An Ivy undergrad is good for the following. If she wants to do computer science, engineering, finance (wall street), or med school, go to an Ivy. The reasons are the post-grad job opps are a world above schools not in the top 10. I worked in admissions as a job during undergrad. The top 50 employers killed themselves to recruit my peers and myself. This does not happen at a state school or as heavily at other top public/private schools.
The Ivy League is about filtering talent. Firms recruit there because the admissions process has filtered out the majority of those students who aren’t serious. Top companies have a quota for each top school. Whether it’s hard # or not, they know they’ll take on 2 or 5 or 12 from Harvard, Yale, or Penn. They offer $20-30K summer internships, tuition reimbursement, vacations, and numerous other perks not found at lower tier schools. This is why you pay a premium. A top undergrad student gets a chance to sit in front of the top companies and literally gets an offer if they don't mess up. This is not true of the majority of undergrad programs.
Top firms and schools recruit directly from the top 10-15 undergraduate programs. That's it. Try breaking into Ibanking, consulting, private equity, or a top tech firm without an Ivy. It's damn near impossible. You may know a guy or 2, but Ivy League grads know dozens at these firms b/c that’s who they recruit. Same for Google, facebook, and most places in Silicon Valley. Or top consulting firms Bain, Mckinnsey, Boston Consulting group, ect. I bring these places up b/c they are the reason you go to an Ivy. These are highly competitive industries that care about name brand recognition. Your chances of landing a $100K+ job out of undergraduate go up exponentially with an Ivy League degree. If she’s going after money and a leg up in starting a career in a competitive field, she should go to one of these schools and major in one of the aforementioned areas.
Otherwise, she should just go to a state school with a large alumni base. Penn state, ohio state, and similar schools will get her a job in tons of other fields. If she excels there, she'll have an outside shot at a top job upon graduation and the coursework will be less rigorous. She hopefully kills it grade-wise and can leverage this higher GPA amongst her peers into a good offer. Hell, if she’s really that smart, she could get a job at a top place, but it will just be tougher. However, starting out at $50K a year is better than $100K w/ $75K in debt.
Also, the debt part is about you guys more than her. If she wants to go to an Ivy League school and you can't afford it, let her know that she'll have to cover a portion. At 22/23 when she graduates, she'll learn the lesson. You think it’s protecting her by not having debt. It can be a teaching moment and also a life lesson. You guys simply don't have enough saved and make too much to count on grants/aid to cover 4 years at a top university. We accumulate debt by purchasing things we can’t afford. You guys can’t afford an Ivy League degree without debt and this is true of the vast majority of the people attending such institutions.
Again, an Ivy League school is a great investment if she wants to use it to catapult her career into high earning field that has difficult barriers of entry. If she wants to just work in private industry, has no clue what to do, or enter a practitioner-minded field (accounting, lawyer, nursing) she should go to a reasonable state school that you can pay cash for.