Harvard - whose $34.9-billion endowment is the largest of any university - already offered one of the most generous aid programs for low-income students of any private college, asking nothing from parents earning under $60,000.
But its announcement Monday, the latest of several recently by elite colleges concerning financial aid, reflects a shift toward making top schools more affordable to middle- and even upper-middle-class families. Harvard admits its full list price of $45,620, while comparable to other elite private universities, is a burden to all but the most wealthy.
The school will now pump more than $20 million in new aid to a group that extends beyond the 90th percentile nationally in income. Harvard President Drew Gilpin Faust called the commitment "a response to the enormous stress that a particular group of families feel about the cost of higher education."
The announcement comes at a time when higher education as a whole is facing criticism from some in Washington for years of rising tuition prices. The wealthiest colleges have faced the greatest public pressure to either cut prices for all or boost financial aid to a broader range of students.
While awards vary based on factors such as number of children in college, Harvard already gave some aid to families earning as much as $200,000. Starting next year, a typical family earning $120,000 would pay about $12,000, down from $19,000 currently.
For a typical family earning $180,000, the payment would drop from more than $30,000 to $18,000.
Under the new plan, parents earning between $60,000 and $120,000 will pay a percentage of their income, rising to 10 percent. Families with incomes between $120,000 and $180,000 will have to pay 10 percent of their incomes, but no more.
Harvard also will no longer count home equity against parents in calculating what they can pay, and will replace all loans with grants - a step that a handful of peers have already taken.
Currently, about half of Harvard's 6,700 undergraduates receive financial aid.
Faust and Dean of Admissions and Financial Aid William Fitzsimmons said they had grown concerned that even students far up the income ladder were discouraged from applying by Harvard's list price.
Survey data showed those who did enroll were passing on research opportunities and time with friends in order to take paying jobs, Fitzsimmons said, adding he worried about an "Upstairs, Downstairs" experience. Some students believed they couldn't afford to take unpaid internships.
"The rich students felt they had very good access to these types of things, but the middle-income and poorer students didn't think they did," Fitzsimmons said.
Harvard's plans will be closely noted in higher education - even though most private colleges couldn't possibly match them. Because of Harvard's visibility, colleges will cite it as a high-profile statement that they take seriously middle-class concerns about college affordability. Education lobbyists in Washington are trying to fend off calls that colleges be required to spend more of their money to keep prices down, even if it means dipping further into endowments.
"This is big news," said Charles Grassley of Iowa, the ranking Republican on the Senate Finance Committee, who has criticized the wealthiest schools for their prices. "This could inspire other expensive colleges to make tuition more affordable. Choosing a college should be based more on brain power than bank account size."
Yale University said Monday that it has been planning its own announcement about enhancing financial aid, which is scheduled for January.
Some schools may be irked by Harvard's plans, particularly those that compete against Harvard for top students. They will likely grumble, at least privately, that Harvard is using its billions to "buy" the best.
Until the early 1990s, a group of elite colleges, including Harvard, offered all students the same aid packages, arguing money shouldn't be a factor in students' decisions. But that practice was curtailed by a federal antitrust suit, and now students are more free to play schools against each other for aid.
Such a big boost in aid by Harvard could accelerate a kind of spending arms race. Still, that would be the kind of competition - to make college more and more affordable - that financial aid advocates would welcome, saying it's better than colleges competing to build more luxurious dormitories and health club-style gyms.
Fitzsimmons said competitive reasons played a "negligible" role in the decision and that a far bigger one was "the increasing pain we've been hearing about" from middle-income students and families.
Still, a growing number of top students are being lured by full scholarships to honors colleges at state universities. Fitzsimmons acknowledged Harvard doesn't want to lose the best and brightest. He noted that - compared to the list price, at least - for almost all families Harvard would now cost no more than their state flagship school.