Thank you for your response which I greatly appreciate!
To clarify my second question: Let's say the parent owns a ROTH IRA and takes a distribution of $5,000 to pay for his child's first year in college. Based on an article I read in this site, the distribution will count as income for the child. If this is the case, it should not impact the financial aid the first 2 years of college since there is a 2-year lookback on both the parent and child's income. Is this correct? The second part of the question is, if the above is correct, only $2,500 should count as the student's income in year three, correct? And lastly, if the student did not work, the $2,500 will be further reduced by the $6,400 a student is allowed to earn without impacting his financial aid on FASFA, correct?