If merit money “goes away,” then there will be a large section of highly capable students who cannot afford to attend college bc their families cannot afford to pay their familial portion. They are the students who are actively seeking the large awards at lower ranked schools in order to afford college.
Fwiw, there are plenty of scholarships out there based on community service, character, and/or leadership on top of academic achievement. NCSU’s Park Scholarship is just one example. It is the lower ranked publics which tend to use the narrow metric of GPA and test scores for their large merit awards.