http://www.stratagee.com/resources/efc_quick_reference/1213_efc_quick_reference.html
This is a little dated but it shows if you have an AGI of 125k - your EFC is roughly 25k. So his EFC is a little higher probably due to his other assets such as his business.
So it looks like the EFC calculation is not the issue. Instead, the real issue here is they are asking if a 175k loan is reasonable? College is usually not free and you can either save for it or pay for it as you go or get a loan. At this point its a personal choice if they want to get a loan or not.
Momrath suggested state schools but I’m not sure that helps either because here in NJ, Rutgers costs almost 32k a year (tuition/room/board/fees) which is practically the same price as his Cornell offer.