61k is the cap on all contributions. That total can consist of employEE contributions up to 100% of earned income and/or employER contributions with a cap of 25% of compensation. There’s a formula to figure those allocations out for self-employed persons.
But yes, the employer contributions typically would not be counted as income by FA offices.
What’s more, with a self-directed 401k the OP could eventually have shifted the entire inheritance used to buy the rental into a 401k account holding the rental in trust, with the rental income flowing to the 401k. All of it invisible from the FA forms.
I agree that not everyone knows all this far enough in advance and saving for college isn’t completely straightforward. But I would think if FA was a concern, chatting with someone about it would have been helpful.