I think the savings you're considering are so minimal that I wouldn't do it for that reason alone.
First, I would absolutely make sure you're maximizing your tax advantaged retirement accounts. This will help you minimize reportable income when doing the FAFSA down the road.
I think your question also raises another "philosophical" question about retirement savings versus college savings. I've always been of the mind that nobody else can save for YOUR retirement, so it's important to make that a priority. I am also not naive about the cost of college education, but I would find a way to put retirement savings first. I guess the question is, "What corrective measures are there if you undersave for retirement versus your child's education?" If you undersave for retirement is there an alternative course of action for you? What about your health? How long do you really want to work? (My guess is, less than the average if you're on this site.) If you undersave for your child's education, there is aid. There is work (and your child has years ahead to do it). There are options (less pricey community college to four year route, or less pricey public universities.) Here's a scenario, what if you fail to save enough for your retirement but then your health fails?
Let me just reiterate that I understand the cost (and value) of education -- my spouse works at a college. But, there are options and quite a few more than some families are willing to accept/think about -- even when money is tight.
