One more time.
The schools have this figured out. It is not an actual problem.
Schools that run on merit aid (like Dennison and Grinnell) make sure to bundle their merit awards into their ED timeline. More than 50% of kids at those schools get merit aid. By being transparent about their merit awards, they make it a lot easier for families to decide to apply ED. If the expected financial package doesn’t come through, then families can back out of the ED commitment. At these schools, the “package” will include merit and/or need based aid. To aid the process, many big merit money schools bake the merit awards into their NPCs. End of the day, aid is just aid.
UChi does virtually no merit aid. So there, the “package” is going to need-based aid. Not because the ED rules say it has to be that way. But because UChi really doesn’t do merit aid. If you happen to wind up as one of the four kids each year at UChi that gets a Stamps schollie, UChi can deal with it.
At the top 20 schools, the combination of big merit/big ED is pretty rare. At the schools that do some meaningful merit (Vandy, WUSTL, Rice, Emory) they have it figured out.
The policies of schools on merit and/or need-based differ. But they will synch up ED with whatever their aid policies happen to be. And also with their other admissions policies, like ED2, EA, etc.
But it is generally true that merit aid tends to go along with EA/RD most often. But not always (e.g. Denison). And ED/need aid also mostly goes together (at least at the highest end schools).