Stanford University just made a huge announcement about its financial aid program.

The university will provide free tuition for students whose parents earn less than $125,000 a year. And for students whose parents earn less than $65,000, Stanford will cover room and board costs, too.

Students enrolled in Stanford's financial aid program will still need to contribute $5,000 to their college costs each year, through work-study programs and summer jobs. Under Stanford's previous financial aid policy, students whose parents earned less than $100,000 a year were eligible for free tuition.