Childminder perhaps, though possibly very similar cost to the nursery. Would certainly be an option looking longer term, as a local childminder would care for pre-school aged children and school aged. As long as your children went to a school from which the childminder could collect, then you could end up having that childcare arrangement for many years. However whilst you can state a preference for a school you might not get a place at your first choice.
Are you happy with the nursery? If so, stick with that. Then once your eldest child has a school place, look at finding a childminder who could take/collect from that school, plus care for your younger child during the day.
Some other factors may come into play later one... once you graduate and get a job, you may find your working hours (plus the commute to/from work) means that the nursery is not viable as nurseries usually (if not always) have a fixed opening and closing time. If you need childcare from 6.30am to 7.30pm, then that will limit your choices a lot. If that becomes the case then a nanny or a childminder who does not mind early starts and late finishes would be your options.
All this is by the by though if the job that you get once you graduate isn't enough to pay for the childcare, yet alone your families cost of living - food, housing, clothing etc.
So say "we're expecting" so is there a DP/DH? Are they contributing towards the cost of childcare? It isn't a cost that should come out of just your pay, they are not just your children. Your partner needs to be pulling their own weight, they need to help out... they could work part-time and care for the children part-time, you could work part-time and care for the children part-time... you may end up not needing any childcare at all. You may decide that you are all better off if you both work full-time and take long family holidays. Whatever the situation becomes, it's not just about your income paying for childcare but about the families income paying for all the families expenses. Some men don't see it that way alas... but if the children's father is still in their lives, then do aim to get them to contribute towards the cost of childcare.