Sixteen percent of students admitted to Stanford University for the upcoming fall semester are first-generation college students, and that number may continue to grow with the announcement this week of more generous financial aid guidelines.

Under the new policy, Stanford will offer free tuition to students whose parents have typical assets and earn annual incomes below $125,000. There will be zero parental contribution needed for tuition, room and board for parents with annual incomes below $65,000.

The university's income threshold was previously $100,000 and $60,000 respectively, with a cap on assets of less than $300,000, excluding retirement accounts.

Over half of Stanford's undergraduates receive financial aid from the school, and 77 percent of them leave the university at graduation with no student debt. Standford's student body is comprised of young folks from 50 U.S. states and 77 countries.

Because Stanford is one of the world's richest universities, with an endowment of $21 billion, and the school enrolls a higher proportion of wealthier students, tuition for lower-income peers can be subsidized. Annual tuition for a typical student totals roughly $65,000 before financial aid.

As part of the financial aid program, students will be required to contribute toward their own expenses through summer jobs or part-time employment during the school year. Students are expected to contribute at least $5,000 per year from these sources, but are not expected to borrow to make the contribution.

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