“But if the worker takes the Roth option and pays the tax, she’ll have less cash NOW to pay for college. The income is still $100k, $10k is in the Roth, she’s actually paid $$$ in taxes so can reduce the FAFSA totals by that paid tax but income is still $100k.
The parent doesn’t have the cash to pay the EFC, even if it is a little lower.”
That’s not what I said. You put the net after tax income in the Roth (in the example above with 10% tax rate that’s $9K out of the $10K that would have gone in pre-tax). You have the same amount of cash left in your bank account (and your net retirement income is unchanged if you are still in the 10% tax bracket), but your EFC is $470 lower because you deduct the extra $1K of federal tax paid in the EFC calculation.