In terms of fin aid, small business owners, mom+pop landlords, and farmers all are at a disadvantage. Even with schools that are extremely generous with fin aid, they will look at the value of the assets that produce the family income (the farmer’s land, the small trucking company’s business vehicles, the mom and pop landlord’s rental property) and count that as available to be tapped for tuition, since the owner could sell or mortgage those assets and pay the tuition. Of course, since the business would have to then pay the mortgage (for as long as the next 30-40 yrs),or not even have the resources necessary to run the business, the business would not then be producing much revenue for the owner to live on, but that won’t really show up in the fin aid calculations for another two years at least. The college’s argument is that the small biz owner/farmer with, say, 100K/yr in income but real assets (land, real estate, mortgagable equipment) is in better financial shape than, say, the state employee earning 100K/yr with no such assets. They don’t take into account that the state employee can expect a pension, has no healthcare costs, may have much greater equity in their home, has great short and long term disability, whatever.
This is why so many children of the self-employed choose to go to their flagship state U. Overall, in terms of the family’s total financial picture, they may not be better off than those who are other than self-employed, but they wind up not qualifying for financial aid.