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

This is a great step in the right direction. I can't speak directly for MIT, but there are issues with how these programs don't apply to parents with small family businesses. My parents had a small business, with my father taking home a salary of $XX,XXX. Duke University used the business assets to determine the EFC (expected family contribution) of literally 90% of the salary. Essentially saying to sell off the family business for the college fund, which was a non-starter.

Small businesses are allegedly the backbone of America, and I feel these tuition support programs overlook this segment of the middle-class.

Isn't the entire point of these assessments to look at total assets, and not just annual income?

I dont think this was an oversight or mistake. I think the expectation was that yes, people should sell assets if they have them .

The "mistake" is that the assets themselves are the source of income. Sell them off, and the income goes away too. It's the equivalent of expecting the parents to use 100% of their income to put their kids into college, which is impossible.

A bunch of stock is a source of income too, but it wouldn't be wrong to use some of it.

If the business is worth enough then selling it can replace all the income you would have ever gotten from it. It's not as simple as "income goes away". The specific numbers make all the difference.