They do it by tucking their money into assets that some colleges don't count. For example, the form for federal aid doesn't ask how much you have in retirement accounts or in tax-deferred annuities. It also ignores the equity value of your house or farm. I think it's unethical to take that approach. Parents who have money, but hide it, should not get as much financial aid as parents who earn less.
Many schools agree.
They may look at the value of homes and other assets when awarding student aid from their private cache of funds. Grandparents, however, are another matter. Colleges don't expect them to pony up for their grandchildren's education. So I think it's fair for them to keep their money out of sight. A grandparent who will contribute to a child's education shouldn't add that money to the child's account.