I'm not surprised that rents are higher than your mortgage. That's true where I live as well. But, besides the interest income on the invested money, you are also forgetting that rentals don't have any maintenance costs. I suspect if you read the MMM article about rent vs own and then do your own calculations, you'll see downsizing now is a win.
I am fully supportive of OP's firm desire not to put tuition burden on his kids.
Many of the posters here are waxing poetic about how character building it was to work through college, but today college students simply can't earn enough money to make any reasonable dent in the cost of their education. I could back in the day, and probably you could, too, but those days seem to be over at most big 4-year institutions.
Instead, the pressure to work too many hours often causes undue stress on students and results in poor grades. I'm a college professor, used to work at a big state school, and I saw it all of the time: Students not learning what they are going to school to learn because they are working too many hours. Sometimes they had to repeat classes, or they hadn't learned enough to do well in the next course in the sequence.
10 hours a week of work or volunteering or sports should be the absolute max with a full time college student load. Remember, they are in classes with other students who are not working, and some of those other students are actually quite serious and not goofing off at all.
Going to school, if you are doing it right, is a full time job. In fact, it is a 50-60 hours a week job if you are challenging yourself and doing all of the assigned work to maximize what you learn. Go to school as your job, volunteer some in the local community, get some exercise, go to church if that is important to you, and try to get enough sleep . . . that's a full week.
I am going to pay for my own kids to get through college. Period. No amount of "but it would be better for them to work" is going to change my mind. The only working I did that was useful was internships in the field I was studying and tutoring (and these generally pay better, but these jobs are also nearly impossible for freshmen to get.) Even the tutoring was only beneficial when it was just a few hours per week. Delivering pizza and cashiering at Au Bon Pain and folding clothes at the Gap . . . none of these helped me.
The odds at this point seem very high that my kids will end up with athletic scholarships (which is functionally working during school.) I will still emphasize to them that they should only go that route because they enjoy playing . . . otherwise just don't play, or play intramurals or on the club team, concentrate on studies, learn as much as you can, and be a normal student. Get the highest grades that lead to the highest paying jobs or best graduate schools. Profit. YMMV.