The biggest issue I see in your logic is you are conflating the actions of the Federal Gov’t with the actions of public and private colleges.
The Federal gov’t decided to make the FAFSA process ‘more equitable’ by removing an advantage only gained by certain families (all families now equally non-advantaged). They also expanded Pell grant eligibility.
Some well-endowed public state and private colleges may not change their proprietary CSS formulas to mimic the Federal gov’t changes in regards to multiple children in college at same time, so many people won’t see massive changes in their aid.
Those two actions aren’t at all in conflict with one another. Two different groups making different decisions.
Biggest issue is that the vast majority of schools were never meeting full need in the first place, and I am sure many of those schools may point to Federal changes in federal aid to explain (in part) why families aren’t getting their full need met. Easier to say that rather than being super honest and saying, “We don’t have enough money to meet every accepted student’s full need - you are going to have to figure out how to fill that gap yourself. That’s always been the case, Good luck”.