As others are suggesting, the difference between this and what their formulas were already doing for families near those income levels with “typical assets” is not necessarily large, particularly when you consider the other charges besides tuition. So the actual budget impact of all this may not be very large.
And the word “free” definitely generates some positive marketing.
That said, these colleges do compete, and I think anything that one such college does that makes aid more generous even marginally for some families puts competitive pressure on peer institutions to do something similar. And price competition is generally pro-consumer, so that’s good.