Stanford's tuition "gift" comes at the same time the university announced it raised more than $800 million dollars in private donations last year. It's the most money raised by any educational institution in a year.
It's following the lead of a number of other prestigious universities who faced pressure from Congress and the public to make college more affordable.
Stanford is one of the wealthiest universities in the nation, and now they will be using 5.5-percent of its multi-billion dollar endowment fund to make college more affordable for low and middle-income students.
In fact for them, under the plan Stanford announced, going to Stanford will cause less than most private and even public universities.
Christopher Stallworth called his mom on Tuesday morning. The news: next year the university will pick up the cost of his tuition.
"It's defiantly a huge improvement off of what it was. It's a huge burden off of my parents, said Stanford junior Christopher Stallworth.
Stanford is pumping $114 million dollars into next year's finacial aid programs.
For students whose families earn less than $60,000 dollars a year, the university will pay for tuition plus room and board. Next fall that's more than $47,000 dollars.
For students whose families earn less than $100,000 dollars, the university will waive tuition costs. The savings: $36,000 thousand a year.
Even for students whose parents earn more than $100,000, improvements in financial aid will reduce costs by an average of 16-percent.
"So for every income category, we've reduced the cost of the parental contribution and we've also reduced the amount of the student contribution to the extent that we can eliminate the concept of loans," said Stanford University Director of Admissions and Financial Aid Richard Shaw.
Just imagine: for many, a Stanford education will no longer mean graduating, tens of thousands of dollars in debt.
"It's really going to help me out a lot, my parents don't make a lot of money, so I also had to take out student loans last year so I'm hoping I don't have to this year," said Stanford freshman Kaitlin Halady.
Stanford is tapping into a $17 billion dollar endowment fund; tax-free money donated mostly by alumni.
The bold move comes amid congressional pressure to use endowments for the public benefit.
In the last two months, Harvard and Yale adopted similar although less aggressive approaches.
"If the message is it's possible, you should dream the impossible dream, take advantage of going to a place like Stanford than that's the best message possible," said Shaw.
While money isn't a factor, you still have to be smart. Stanford is not going to compromise its academic standards. Out of the 25,000 undergraduate applicants Stanford has for the fall, the university expects to approve 2,400 – roughly 9-percent.
