Should i join an average engineering college or should i prepare for iit by dropping.

According to my experience it was horrible to drop one more year. That fear of not getting any NIT or IIT will never let you sleep, pressure of being successful will keep pushing you forward. Expectation of people will be high from you. But in the end, you made into some iit's or not doesn't matter,

in average college as u have mentioned u will have to work even harder for job security.then also u can't take things for granted so in my views it's better to drop a year.

You are the right person to judge your own capability. If you feel that you can crack IIT entrance exam, then its worth dropping a year.