OP, many Merit awards are private donors contributions. My D. was on full tuition Merit scholarship plus got a bit more later at in-sate public. She had about 10 individual scholarships with the donors names attached to them and later she got additional Merit for returning students based on her college GPA, which also was privately donated and had a lot of specifics about who should be rewarded, it was not just high college GPA. I bet that while 100% of the applicant pool is getting Merit award, the amount is different from applicant to another and some may not even fall under criteria for specific awards. And that is how college attracts the best HS students. They will loose this leverage if the price is simply dropped for all applicants. I do not think that they can legally treat donors contributions this way by simply applying it to tuition across.