Because the home equity of your income property is a financial asset. Compared with another family with the same income who does not have income property, you have access to funds to pay for your child’s education. You can sell the properties. You may not want to, but that’s not the college’s problem. It’s like having money in the bank that you don’t want to use.
Why don’t you have retirement funds? Qualified retirement funds are excluded from the EFC calculation.