Can the financial aid office disclose information about a student's financial situation?

Sorry if this seems like a dumb question, but it’s pretty important to me.
I recently read this article about how Princeton University got a less preppy by recruiting more low-income students.

This is a paragraph from the article:
“By 2013, the Pell-eligible share had doubled to nearly 15 percent. For the next year’s class, Rapelye took another step: She asked Princeton’s financial aid office to advise which promising applicants were likely to qualify for Pell. She noted that data in their files before making final decisions.”
https://www.washingtonpost.com/local/education/how-an-ivy-got-less-preppy-princeton-draws-surge-of-students-from-modest-means/2017/10/23/b66955b6-a770-11e7-850e-2bdd1236be5d_story.html?utm_term=.eddd8253b0b7

Do many elite colleges looking for low-income students do this? Also, how does the financial aid office determine which students are likely to qualify for Pell?

Thank you.

Because they are part of the same institution, if it’s actually being used in the admission process, I don’t see where there would be legal problems. It might be more of a problem if they asked more specific questions. It’s been a few years since I’ve filed financial aid forms (both FAFSA and Profile), but there is probably a disclaimer allowing the financial aid office to share information with the admissions office. Otherwise, we wouldn’t have conversations about admission being need blind vs. need-aware at any schools

Determining who is Pell eligible is pretty easy - look at the FAFSA. Schools that claim to be need blind claim they aren’t sharing information between the FA and admissions office (except for international or post-RD rounds). Maybe they figure that since they aren’t holding it against the applicant, but are actually using it as a positive in admissions, they aren’t violating that ‘need blind’ policy.

While I understand their goal, how can they claim to be “need blind”?

Remember they also look at the school profile , which will have how many student receive free or reduced lunch. Admissions knows which student have fee waivers for application fees. Princeton is also a Questbridge partner school, they will know students applying through Questbridge. There are plenty of ways to gauge low income without actually looking at financial aid forms. Parent educational level and employment are on the first page of the common app (this can also signal first gen or economically disavantaged students).

I am also sure that the regional admissions officer as a pretty good grasp on the schools in their territories.

You also check the box on your application stating that you are applying for financial aid. At that time admissions does not know if you need a little aid or the whole ball of wax.

There are over 40 need-blind elite/selective schools, so generalizing will be tough.