<p>Oh dear. This question has been discussed at length here.</p>
<p>In brief, and broadly speaking, there are two different approaches to merit aid:</p>
<ul>
<li><p>merit aid that is truly merit based, such as an award tied to achieving NM finalist status, or based on an evaluation of one’s HS record as contained in the application package.</p></li>
<li><p>aid that is targeted at revenue maximization. Two years ago (maybe three?) the Atlantic Monthly, in its September college issue, had a great article discussing this approach. In short, colleges would rather give 3 merit awards of $10,000 each than one full ride at $30,000 and then lose some students who were otherwise well qualified but not from wealthy families. </p></li>
<li><p>Frequently, IMHO, a college will combine the two approaches above, so that awards are based largely on merit, but also take into consideration ability to pay (need, if you will). I suspect this approach is most common at colleges that gap their aid awards.</p></li>
</ul>