Stanford University will no longer consider families' home equity in their financial aid calculations, according to the university's website and a Wall Street Journal report. Stanford joins colleges such as MIT and Harvard University in omitting the metric.
The decision acknowledges that rising home values across the country may not be indicative of a family's actual wealth and thus the extent of their ability to contribute to college tuition.
For most families earning $150,000-plus annually, Stanford would previously consider home equity up to 1.2 times that amount. Colleges typically expect families to put between 2% and 12% of their assets toward college costs, The Journal noted. Stanford doesn't expect parental contributions for families earning below $65,000 and it covers them for those earning under $125,000.
Higher family income is tied to better odds of attending and completing college. However, many students' families make too much to qualify for Pell Grants but not enough to cover their expected contribution, Jeffrey Selingo wrote in The Washington Post last year.
With the real cost of attending college having spiked since the Great Recession, more institutions are increasing the value of their scholarships and targeting higher income brackets in order to draw students with larger unmet needs.
Stanford's decision to drop home equity from its in-house financial aid calculation for students from higher-income families is a move in that direction. FAFSA does not ask for information about home equity, according to U.S. News & World Report, but many colleges gather additional financial details.
Other colleges looking to make tuition more affordable to middle- and higher-income students include Rice University, which this fall said it would offer full-tuition scholarships to qualifying students whose families earn between $65,000 and $130,000 annually and partial scholarships to students with family incomes from $130,000 to $200,000.
The University of Virginia, a public institution, will waive tuition for in-state students whose families earn less than $80,000 and have "typical assets." It is joined by the University of Illinois at Urbana-Champaign, which in August said it would offer free tuition to qualifying students whose family income is at or below $61,000. To qualify for Pell Grants, students' family incomes must be $50,000 or less.
Meanwhile, the price colleges advertise as full tuition has outpaced that of other consumer goods and services. And as the college student population shrinks and a strong job market pulls many into the workforce, colleges are being forced to reevaluate those numbers as a possible deterrent.
Several — about 50 since 2016 — have implemented tuition resets in order for the sticker price to better reflect what students and their families are likely to be on the hook for, Forbes explains.