I absolutely agree that 401K/IRA money should be taken into account when there is a huge amount in there. It's just a matter of at what point it starts to count, and colleges have been mum on that.
My son's girlfriend's mother has a relatively large IRA due to the fact that she is a widow of a relatively well to do man. The girl's father died some years ago--he was older, and the retirement accounts went to the spouse. They live modestly, and the money is there for retirement. Who is to decide how much is excess in such a case? Both daughters went to state schools so the amounts were never an issue, and I don't know if they even got aid, but the mother certainly does not make enough to send them to a private school without tapping the retirement fund or with financial aid.