Does my income or my assets matter more when colleges calculate financial aid?

Income almost always matters more. In the federal formula, parent income can be assessed at a marginal rate up to roughly 47% after allowances, whereas parent assets are assessed at only about 5.6%. That means a raise or a one-time capital gain in the "prior-prior" tax year the FAFSA uses can shrink aid far more than a large 529 balance. Because the FAFSA now looks back two years, the income you report on this year's form comes from a tax year already in the past. Families sometimes manage the timing of Roth conversions, bonuses, or asset sales to avoid spiking income in a base year. Assets still matter, but income is the dominant lever.