The Associated Press NEW HAVEN, Conn. (AP) -- Following Princeton's lead, Yale University is overhauling its financial aid policy to make it easier for middle-class families to send their children to college without dipping into retirement savings or further mortgaging the house. The changes are expected to pressure other highly selective schools, including the other Ivies, into taking similar action. Yale has decided to exempt up to $150,000 of a family's savings, home equity and other assets from consideration in determining what parents are expected to contribute toward their child's education. No such exemption now exists at Yale, where tuition, room and board will top $30,000 next year. For years, Ivy League schools have admitted students on a ''need-blind'' basis, meaning that finances are not a consideration in admission. When a poor or middle-income student gets an offer of admission, the schools works out a financial aid package, typically a mix of grants, bank loans, contributions from parents and work-study options. Yale's grant portion of the mix averaged about $13,000 a year in 1997. The change means that parents of middle-class students will not be penalized for having sunk all of their money into paying off their mortgage or saving for retirement. Princeton decided to stop counting home equity for most families with incomes below $90,000. The school's plan also would alter financial aid packages to increase grants and decrease loans for students with family incomes between $40,000 and $57,500. Additionally, Princeton will replace loans with grants for students whose family incomes are below $40,000. Experts said other top colleges may have no choice but to make similar changes. ''I imagine a number of schools, mainly their competitors, would follow suit,'' said Lawrence Zaglaniczny of the National Association of Student Financial Aid Administrators. Yale expects half of the students on financial aid to benefit from the new formula, with an extra $1,400 on average being awarded by the school. Princeton expects awards to increase by $3,000 to $4,000 annually. About 2,000 students at both schools receive financial aid. Princeton has approximately 4,600 undergraduates; Yale has about 5,200. Penn, by contrast, has slightly less than 10,000 undergraduates, 4,000 of whom receive financial aid.