The private schools using CSS profiles that look at home equity are actually very fair and are not necessarily penalizing the frugal family. That’s nonsense.
If you have an extra 10k a year. You can put it into a 529 plan. A taxable investment account or pay down principal on a mortgage (technically investing in real estate). The first two hurt you for financial aid. The third item wouldn’t. All three are “frugal”. So suppose I have 250k in 529 plan or investments. It would make great sense to cash these out and dump into a home or second home. Effectively hiding it. After school is done refinance with cash out and put back into the market and be effectively in the same place and have had incurred significant savings. Why would anyone save for college. Why have a 529. Just load up on real estate.
No the net worth test is fair. And avoids gamesmanship.
If you spend all of your money, you won’t have enough excess income to pay for an expensive college anyway.