[jefftk]

It sounds to me like your parent is describing financial aid at high end colleges. The college has a sticker price, say $50k/y, and for people that can't afford it they have need-based financial aid. They ask you lots of details about your family's income and assets, and come up with a number that they think is the most you can pay.

It's price discrimination, in that it's charging people in proportion to what they can pay.

[apta]

Are you referring to the loan-based "financial aid"? This is one of the most hypocritical terms I came across. It's a loan, not an aid. An aid would directly reduce the amount of money you have to pay (discounts, scholarships, grants, etc.). A loan is not an "aid".

[jefftk]

I'm primarily talking about grants, not loans, since that's where the price discrimination is clearest. They're effectively setting the price at exactly what they calculate you can pay.