If your family makes just above $150K per year in the US (not uncommon, especially in high cost of living areas like NYC, SF, DC, etc), you fall in the category where you have no "need" and according to some outdated government formula can afford the whole tuition, usually 20-60K per year.
The reality, however, is that 150K is the minimum living wage for a family with two kids in a place like SF, and usually not enough.
The sad part is that someone who makes $500K a year or has millions in the bank falls in that same category.
The people who make $500k / year feel the same way you do: http://www.nytimes.com/2009/02/08/fashion/08halfmill.html. Virtually no one considers themselves "rich" because they tend to put their "minimum acceptable" level at whatever lifestyle they're currently living, so obviously they can just barely afford it. Lack of perspective (historical, global, or even just from outside of your own social circles) is a real problem.
We can't all live exactly where we want to live. There are plenty of places in the SF bay area where 150k is fine. There are plenty of places in the SF bay area where even $2mil/year isn't fine.
If you choose to sacrifice your childrens' college education so you can live in SF, that's your prerogative. Most families don't even have this choice. Complaining that you're minimum living wage at these amounts is hugely insulting to the vast majority of the population.
Living wage is different than the poverty line. I wouldn't be surprised if $150k was really tight for a family of 4 in SF proper.
Running the calculations, a payroll calculator indicates that $150k/yr turns into $3925 take home every 2 weeks or just over $100k/yr. The housing alone for a three bedroom (assuming everyone shares a room) would run at least $60k/yr. That leaves $40k/yr to support 6 people. That may be possible, but it's not easy and it's damn near impossible to be saving for college on that amount of money.
(2) $40k/year is enough money to support four people (or even six), if you've already paid taxes and rent. That's more than $500-800 per month for food/clothes/transportation/entertainment, etc.
Of course, many people would like families to get more than $150,000 of income, but I hope we all agree that it's common to get by on less than $150,000 of family income, as most families do.
If by "get by" you mean survive, then, certainly. But are they living a good comfortable life and are able to afford good food, a second car, good health insurance, good dental care, music lessons for the children, a decent family vacation and a well maintained house? Doubt it. Every hard working educated parent deserves this and being able to put their kids though college in a civilized society that the USA claims to be.
This is the case for a lot of things. Pretty much all "middle-class" tax credits phase out by the time you hit $80k, regardless of cost of living, because the IRS doesn't scale anything by zip code and so assumes that a household making 6 figures must be loaded.
The only government subsidies that are worth anything are Pell grants and they phase out well below 150k. Also, they are limited to like 6k a year, way less than your 150k family can kick in.
The elite private schools have a similar formula that sort of screws over these people. But you have no right to an elite education. Just go to Berkeley instead of Stanford or UVA instead of Duke.
Having had a kid accepted to UVA, UChicago and UC Berkely this year and being a resident of VA, I can tell you that board and tuition at UVA are still over 30K even for in-state. UChicago (a private shool) was the only one that gave a (quite generous, actually) merit grant.
But congrats on your kid getting a merit scholarship at U of C. That's great and I'm sure you are very proud. I went of school and U of Illinois and Northwestern so I'm supposed to hate U of C, but it's a great school.
The reality, however, is that 150K is the minimum living wage for a family with two kids in a place like SF, and usually not enough.
The sad part is that someone who makes $500K a year or has millions in the bank falls in that same category.