<p>Yes, the method of giving the higher of merit scholarships or need-based aid basically means that the students with higher need-based aid benefit less from merit scholarships, since the merit scholarship that is less than the need-based aid does not benefit the student at all in this case.</p>
<p>It may seem more sensible to many people to apply merit scholarships first to reducing ESC (expected student contribution of Stafford loan and/or work earnings). But do very many colleges do that in general?</p>