I know people who swear they know someone who got merit awards from schools that don’t give them. You can’t believe everything you hear. It is possible that the student got some outside scholarship, perhaps referred to by the school to bring the cost down by that much, but it would have had to have been one heck of an award for the school to give up all federal money for that student. Some schools do that–my college allows stacking of scholarships for the freshman year, and all you lose is your federal monies. The school will not cut back on their grants. But it’s federal law that you can’t go below EFC and still use federal funds.
Some schools, like Harvard, have guarantees that a family with an income under $X doesn’t have to pay tuition. I don’t know if W or S have such a policy. This is regardless of EFC, and the school does forego federal funds if necessary to make it happen.