We should all realize that when we call for schools to freeze or lower tuition it often means that those who can least afford it have to sacrifice a little more. But the fact of the matter is that very few of us can afford any increases.
Other schools are considering deferring some obligations rather than simply writing them off, in the hopes that some parents will be able to make the payments in the future when they are in better financial situations. That's also a good idea though I doubt too many parents will make those payments in the future especially if their kids graduate before their situations improve.
While asking for all of this documentation (W-2's, mortgage statements, etc.) is necessary, I think the schools really need to visit the houses of the people applying. Papers don't always tell the whole story. They should see how people are actually living. I think for the amount of money we are talking about its worth the investment in manpower.