Don’t let financial aid cloud the big picture

Q: I have a $125,000, 30-year mortgage with a fixed rate of 6.125 percent. My son will start college in 2013. I wish to have my mortgage paid off by the time I retire in 2019. I also have a home equity line of credit of $22,000, which I hope to pay off by July 2009, after which I can contribute $1,500 per month to 529 accounts for my kids. I can tap into mutual-fund accounts for about $60,000 after capital-gains taxes. If I use that to pay down my mortgage in September 2008, then I can have my mortgage paid off by July 2017. In addition, I have been told that by cashing in my mutual-fund accounts, I will have fewer assets that will be used in the federal student loan application to calculate my portion of the college costs. Is this a viable strategy?