I went to Georgia Tech from out of state. I got a generous scholarship which reduced tuition to in-state levels. My in-state university gave me nothing. GT was the more prestigious school. It wasn't really a hard decision.
Some states have lots of pure merit money - Georgia for example. There are many others. Other states, such as Washington state where I live now, reserve all their money for people with financial need and minorities. I can easily see it being a financial wash to send my kids out of state to a place with merit-based scholarships. They're young, so I haven't looked into it extensively, but that's my guess based on what I know now.
From UW's website (
https://www.washington.edu/financialaid/types-of-aid/scholarships/undergraduate-scholarships/
):
"Approximately 600 awards from privately donated funds are given each year to students who demonstrate outstanding academic achievement and financial need. " " These awards are a partial tuition waiver, based on academic merit and financial need" "Selection, by the Office of Admissions, is predominately academic, but also incorporates activities, achievements, leadership and socio-economic factors."
This is the story for ALL the scholarship listings - all based on financial need. Georgia Tech, by contrast, gives money purely based on merit:
http://stampsps.gatech.edu/Program-Pillars