<p>
</p>
<p>It is more of a business model. Look up “price discrimination” from an economics textbook.</p>
<p>Simply put, they want to find the highest possible price that will be acceptable to each given student. Obviously, the better students will have more choices, so lowering their prices (merit scholarships) is used to entice them to attend. The students from poor families may not attend college at all if the price is too high, so their prices are also lowered (need-based financial aid) to entice them to attend.</p>
<p>Meanwhile, students from wealthy families who are in the lower end of the class in terms of academic credentials are probably glad to get into the college (as a “reach” for them), so they are more likely to pay list price. So the college does not discount their prices.</p>