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Financial aid calculations involve complex forumulas for need analysis.

To over-simplify, yes, the more money that you and your child have, the less *need* for aid you have. Thus, aid awards will probably be smaller. However, not saving in order to get more aid is a foolish (not Foolish!) strategy. If your children have less need and therefore less aid, they'll probably also have less loan burden when they graduate. They'll have more control over where they choose to go to school.

I think your best bet is to save early, save often, save in a variety of vehicles (EIRA, Roth for you, Roth for your kids when they start earning $, maybe a 529, etc.) See http://www.finaid.org/ for a lot more information on financial aid.
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