Colleges are going to look at both asset and savings. The nice thing about a home is that it is not factored into the equasion. Therefore if you are looking to get financial assistance it is good to be house rich and savings poor.
If I had children getting ready for college my strategy would be to pay down as much of my home as I could minimizing my savings that I am suppose to report and simultaneously opening up a line of credit on the home so I still have access to the money.
Additionally your kids regarless of income will qualify for federal stafford loans which helps them build credit, take ownership in their education, and you can always help them pay off as a reward for doing well in school.
You will also have a federal Parent Plus loans available once again regarqdless of how much you make. Not a good deal at the moment but I would suspect it will be changing to a more favorable program in the not to distant future.
