I recently experienced a similar situation (and actually posted about it here). While some commented that I didn’t know their “true” financial situation, I actually did. They were very clear about how they purposely arranged and then misled about their finances and “self-employment” so that their student would qualify for a Pell, as the state school the student attends now covers full tuition for Pell recipients.
And it worked. Student has received full tuition on parents’ scheming. Financial aid did not “catch” it or delve deeply, I guess. While another young person I know whose parents do NOT own 3 homes, 5 vehicles, a new RV - all paid in cash - and who are currently not on the second whirlwind trip to Europe this year, like the scheming parents, is dropping out because he can’t pay and has honest parents. It’s maddening to see this selfishness.
That being said, it’s possible that this family you know has legitimately or at least on the surface been able to shelter business or real estate assets so they are unreportable . That can be worked to make it look like they have nothing with which to pay even if in reality they could pay tuition ten times over. Blame that on the FAFSA rules.