The amount universities expect a family to pay for college in the US depends on two numbers: annual income and assets. A fairly typical formula for the expected family contribution is (income - allowance) * X + assets*Y, where the "allowance" depends on things like size of family, parents' ages, state of residence, etc, X varies from 22 to 47% depending on the size of (income - allowance) (and in particular there are various brackets in there, with different marginal rates, etc), and Y is generally about 5.7%. This is all for the parents; student income and assets are treated more harshly.
All of which is to say that the college might think you can pay a lot because you have a lot of income, or because you have a lot of assets.
What counts as "assets" varies also. Obviously things like bank accounts and stock investments are included, though retirement accounts are typically excluded. Home equity for the primary residence is included by many private colleges but not by the FAFSA's methodology (which is used by most public colleges, as I understand).
So yes, this can be a massive caveat. Stanford does consider home equity as part of your assets, so if you have a fully paid off house they may effectively assume that you will take out home equity loans or a mortgage on it to help pay for the college education.
Of course it's not that common for families with income of < 125k who have college-age kids to have a fully paid off expensive house. So in practice for many people this is not an issue. But there are absolutely people who are asset-rich and income-poor (think retirees!) for whom the fact that all this stuff is not purely income-based makes a huge difference.
All of which is to say that the college might think you can pay a lot because you have a lot of income, or because you have a lot of assets.
What counts as "assets" varies also. Obviously things like bank accounts and stock investments are included, though retirement accounts are typically excluded. Home equity for the primary residence is included by many private colleges but not by the FAFSA's methodology (which is used by most public colleges, as I understand).
So yes, this can be a massive caveat. Stanford does consider home equity as part of your assets, so if you have a fully paid off house they may effectively assume that you will take out home equity loans or a mortgage on it to help pay for the college education.
Of course it's not that common for families with income of < 125k who have college-age kids to have a fully paid off expensive house. So in practice for many people this is not an issue. But there are absolutely people who are asset-rich and income-poor (think retirees!) for whom the fact that all this stuff is not purely income-based makes a huge difference.