Do Colleges Know Parental Income?

Definitely. Your achievements are looked at in the context of the opportunities which are available to you.

A poor kid who goes to an underperforming school may be cut some slack for a lower GPA, if the school doesn’t offer lots of AP/honors course opportunities to “inflate” his/her GPA.

A poor kid w few “ECs” because he/she has to work/ take care of younger siblings because single mom is a hotel housekeeper, will be looked upon more favorably than an affluent kid w few ECs because he stayed at home to play video games.