Stanford just made history in relieving student debt by offering families earning an annual income of $125,000 a free college education.
Students whose parents make $125,000 per year and have assets of less than $30,000 — excluding retirement benefits — will receive free tuition from the university, and families earning less than $65,000 will not be expected to pay room and board costs either.
Students are still expected to pay $5,000 towards college costs from summer earnings, savings and part-time work, but there is no rule stating the parents can’t pay that amount.
Previously, the aid package capped at $100,000, but Stanford is able to increase the number given its high proportion of wealthy students that pay a higher tuition than Stanford’s lower-income students, and because Stanford is one of the world’s richest universities with an endowment of $21 billion.
Stanford has typically been generous to middle class families with most students from families earning less than $60,000 receiving subsidized loans and Pell Grants. In 2010, the median family income for Stanford was $125,000.
In contrast, on the national scale Pell Grants usually go to students from families earning less than $50,000 with only 41 percent of undergraduates receiving Pell Grants.
This landmark initiative is an impressive step in combating the U.S. student debt crisis with increasing college tuition hikes pushing many students to question the value of a college diploma. Yet while Stanford has made tuition virtually free for the middle class, the university’s remarkably low acceptance rate (only 5% of this year’s applicants were accepted) gives the news an air of hopelessness for most college bound teenagers. Hopefully, Stanford’s policy change will encourage other schools to make similar adjustments.