"Is the college authorized to discuss the family’s information with the student or to release the family’s information to financial aid agencies and scholarship donors providing aid to the student? " Now i understand that if i say no then the chance to get aid would be very less but will I have the surety that my family’s personal information would be in safe hands?
IMO there are no real sureties, period, but if you want someone to give you money, you are being required to follow their rules. If you have so much money that this information is a risk, then you won't need FA.
Do you want the maximum chances at getting scholarships? If so…then do as the college wants you to do. If you aren’t willing to share info, it’s very possible you could miss out on some awards.
The schools aren’t going to give out your SS Numbers. They are going to give the financials that might make you eligible for need based scholarships.