USC Scholarships - Need/race/geography factors

USC merit scholarships are merit based or do they have other preferences?

Lots of factors, some subjective. If it was just merit, virtually everyone admitted would have to receive something. They don’t accept more than 3,000 with scores in the 99 percentile…and students with way lower scores get scholarships. So all of the above basically plus more. That’s why they don’t use the word “honors” since most students meet that criteria.

If these aren’t purely academic merit scholarships then is there a income or diversity component or preference?

no. USC 's Presidential and Full Tuition scholarships are distributed by School based on both merit and other factors- i.e talent, interests, results of on campus interviews [ which are by invitation only], etc.
The NM 1/2 tuition scholarships are automatically awarded to accepted NMF’s who chose USC as their final first choice and enroll at USC -all are awarded regardless of income, race, or geographic origin.