The bible-type article for FA

is here (http://www.finaid.org/fafsa/maximize.phtml), if you understand and digest them well it will be serving you a great benefit. They are totlly legal but you could save enormous amount of money if you plan 10 years early before your kids starting their college years.

Specifically for your questions, it is AGI that counts and college also consider your your retirement, but only for the immediate year before you child enrolling college, that implies to the year of your kid's second semester of junior year and first semester of senior year.

The retirements prior to the immediate year would count as zero when they do the calculation in the private schools, although you have to report all of retirement values in your FAFSA or college profile. You would now realize that half million or three quarters of million inside or outside of retirement account would make a huge difference, but retirement has a limit for each year so you have to have a consistent manner of saving to achieve this huge advantage for private school tuition calculation.The single most valuable piece of knowledge on FA for private schools is to save as much and as early as possible for all of the retirement options, such as 401K, 403B, Roth or traditional IRA.

For mortgage, generally speaking public colleges don't know taking it into a count but state universities barely extend need based financial aids to students anyway. Harvard does not count mortgage so you could put all of money into a million dollar house to decrease your liquid assets, but Yale counts mortgage equity value, so does many elite schools like Williams. Yale's president Levin is an economist so Yale did a smart thing to prevent potential cheating or hiding a huge sum of money.