Undergraduates with family income below $200k will be tuition-free at MIT

Yes but the algorithm also is that they take 5% of your assets each year. So if you've saved $1M (not much for a $200K a year couple in their 50s), that's $50K a year out the door.

Where are you seeing this?

Honestly, that wouldn’t be a bad way to fund education: education is free, but the university gets taxation power over you so they can tax you at x% of your income. It aligns incentives better than the current system.

In which case you may like how it’s done in the UK. it’s technically debt but in essence works as a graduate tax. The government pays for your education with a loan. You then only pay back 9% of your income over a certain income threshold. You do this until you pay back the loan or 30-40 years have passed. So in practice this is a graduate tax.

FAFSA. That's one of the calculations that goes into Expected Family Contribution. There is an expectation that parent's contribute some % of income (20%?), 5% of assets, and that the student basically contributes 90% of any income or assets to their name before a single dollar of aid, usually federal loans, will be offered.

For all of you younger folks just starting your families, expect to pay full price for college if you are anywhere near the top 25% of earners (most of this site presumably). Any scholarship money is a bonus but aid probably isn't going to be forthcoming.

The subtext of this MIT announcement is that any family making more than $200,000 will be paying full price to subsidize the poorer students.

Australia does something similar (it's called HECS if you want to search for details).

For most taxes you expect higher earners to pay more but this is not the case with student loans because high earners pay of their loans quickly whereas lower earners end up paying far more in interest.

An actual graduate tax would be far less regressive than the current system