Common or Uncommon for a school to use merit to replace loans?

If a student qualifies for need based aid, which would include loans, but then also gets merit aid, some schools will first reduce the loans amount before reducing the need based grant. I was under the impression this was fairly common but now I’m not so sure.
Of particular interest on this subject are American University and Emory/ Oxford. I’ve contacted American but didn’t really get a clear answer.

Each place sets its own policy about this, and that policy can change from one year to the next. You are going to have to ask each of these institutions about their current policy.

Ask each school. Policies vary.