318 0r 360

Somebody help me out here. I bought my son a 1965 Barracuda /6 3spd. that we are doing a ground up restoration on. Including a V8 swap and an automatic tranny. Keep this in mind, this will be my sons first car, (and we all remember our first car good or bad, and i want this kid to remember his first car proudly.) I want to keep the gas mileage reasonable, since he will eventually be driving it back and forth to college, and i don't need him calling me everyday for gas money, and it will be an daily driver, so gear ratio is an issue. I initially planned on a 318 buildup, but thought maybe 360. Will a 904, and a 81/4 hold up to a 400hp 360. Anybody got any suggestions. Anybody with a similar package, who can tell me how there drivability is. By the way reasonable mileage would be 10-12mpg