My wife and I both work 40 hours per week (can't afford to have either of us not work). For a while, we had someone come to our home to provide care for our first child two days a week, who wanted $12 an hour. We got her to settle for $10/hour, which for a nine-hour day came out to $180/week, or $720/mo. And that's just for two days a week.
When we had our second child, we had to go to five-days-a-week care, so after pricing out several day-care options in the Seattle area, we put both of our kids into a good local daycare -- not the highest-priced or lowest-priced, but closer to the cheapest than the most expensive, though still one we felt was of good quality. For five-day-a-week care, we currently pay $400/week (total for both kids), or $1,600/month, or roughly $19,000/year. This is more than the mortgage on our $233,000 house.
In addition to day care, our grocery bills doubled from about $75/week for just two of us, to roughly $150/week. There's also, as you mentioned, health insurance ($300/month for health and dental for both kids), clothing, living supplies (i.e., beds, dressers, toys, books, etc., etc., etc.), and yes, college savings.
Not that I am trying to convince you one way or another about whether to have kids, I just think you should not go into it expecting it to be "much cheaper than you thought." Having kids is a MAJOR, life-altering financial (not to mention physical and emotional) investment.