There is nothing wrong with that, and I think it is exactly what happened. She received notice of this AT hs grad and knew that she didn’t need it.
I think our beef is with the news reporting that she gave $40k of her own money away (and it is $10k/yr). In the end, it probably made no difference to her cost to go to Harvard. If she’d accepted this scholarship, it is likely other aid would have been reduced.
There are a lot of scholarships that pay ‘last dollar.’ There is one in my state that does, the Daniels, and many years ago it was awarded to a guy headed to Yale. I have no idea how they compute what is the ‘last’ dollar, but figure the scholarship actually paid less than it would have at a public school that didn’t meet full need.