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Why don't schools just lower the price?

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Several of the schools my son is looking at, mostly tiny liberal arts schools without national reputations, seem to offer "merit aid" to 100% of the students they accept. One school we looked at states that they offer merit aid to 100% of their applicants, and has a special $12,000 "merit award" specifically for people who don't qualify for any of their named scholarships, which cover anyone with a GPS of 3.0 or higher. If they're giving $12,000 a year to the students who are barely accepted, why don't they just charge $12,000 a year less to everyone, and then give $5,000+ to the people with 3.0's or higher who currently get $17,000+? What am I missing?

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