A reason to keep merit scholarships open to "rich" kids is to not punish them for their parents' wealth. Most "rich" kids have few assets to their name -- it's their parents who have the income and assets. There are rich parents like me who will pay for the college education of their children, but there are also rich parents who think, perhaps based on their own experiences when college was much cheaper, that college costs are the responsibility of the student.

You can regularly read on College Confidential about kids taking huge loans because colleges deem them rich while their parents are not willing to contribute what the colleges expect.