Transmissions... Who Needs Them?

On Thursday my car decided that it didn't feel like shifting correctly anymore. It would either rev really fast when I was going about 40mph and not shift up, or not shift down when I stopped.
I took it to a transmission place today to learn that unfortunately it's not a minor problem. Of course it's not, I mean I don't get that lucky. They have to completely take the transmission apart to see what's wrong with it ($645 in labor... which goes away if they fix it and they just charge the at least $1350 to rebuild or replace it).
This is the point where you ask, is it even worth it? The car is 16 years old. Is it time to just replace it? The problem is that right now there isn't enough money to buy a better car. So yes, we fix it.
It's frustrating because it's such a huge unexpected cost. My parents are paying for it, which definitely helps because I couldn't afford it. But that amount is almost a semester's worth of tuition for me. It's not like there is just a random extra $1300 lying around to be spent on something like this.
I am getting so frustrated with this car.