We used to do that at the school where I started my financial aid career (many, many years ago). We assumed assets based on interest/dividends, and if we didn’t see reported assets that made sense based on those assumptions, we would request bank/investment statements as of the date of filing. It’s possible that this school just adds the assumed assets into the formula, which they are free to do when awarding their own aid. I think that it would be wise for your parent to read the information @BrownRiceS24D27D29 posted & call the financial aid office to discuss.
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