My D got a good merit package at LMU, from out of state, with lower stats (29 ACT I think, maybe a 3.7 UW, school didn’t weigh GPAs). I’m a huge fan of LMUs size, the mid size (6000) enrollment. Pepperdine is smaller I believe, and has more of a religious feel to it (LMU is Jesuit but aside from some core requirements in religion or ethics, I don’t get the feel that the student body is strongly religious).
I will say that yes, attending school in CA is expensive, from dorms to meal plans to gas to groceries to parking to off campus apartments to flights home.
I say YES to the big fish in a small pond environment if that is what you think your son will thrive in. And the smaller and lesser known the school, the higher the chance of great merit aid. You just have to be diligent in your search. Have you checked out Colleges That Change Lives? A friend of mine got a full ride, OOS, to one of those schools.