https://www.kiplinger.com/article/college/T042-C000-S002-cracking-the-financial-aid-code.html
I found this article an excellent example of how this works at colleges.
That article is nine years old. Enrollment management has changed in the years since. My younger kid went to a college that actively practiced enrollment management in 2006 when she enrolled. Their endowment and funding has changed in such a way that this is not any longer done.
In addition, there are better metrics now to help schools predict enrollment, as well as who can pay for what. They also know the balance between what they Award for aid, and what is usually accepted by matriculating students.
It is old, and with technological advances, things have become more fine tuned with colleges now hiring companies that focus on the analysis of applicants. But I think that the basic philosophy so clearly outlined remains.
In the last several years, as college costs have risen, merit awards are on the rise at a lot of the smaller Private schools.
I had worked many many years ago at a school that similarly coded all accepted students, and financial aid was distributed accordingly. Though admissions was need blind, gapping the aid packages was done in a systematic way.
while the article is older, this still applies to many, many colleges. Colleges have a vested interest in getting top students on campus. As that one person said,
This is not only true, but it also makes it easier to attract the better professors when they know that they’ll be teaching top students.
Considering the state of the tenure-track faculty job market (hundreds of applicants per job), most who want to be professors cannot be that picky. Exceptions may be in fields where non-academic jobs are sufficiently available that the competition level for academic jobs is lower.