It is wise (when considering any school) to be concerned about losing one’s scholarship due to a GPA. Some schools have a ridiculously high requirement, precisely because they know that they will have to fork over less scholarship money in subsequent years because some students just can’t maintain the high req. UA does not seem to have this mentality - they genuinely want you to succeed, and UA will work with students who are willing and committed to bring up their grades, should they fall short.
That said, merit scholarships are meant to be just that: rewarding merit. If a student can’t or won’t maintain enough diligence to earn that merit, then there should be consequences. Engineering is a difficult major. 3.0 GPA is very doable, IMO, but requires diligence. That is a straight B average. Having a few As or even A+s in a few classes will give some cushion to offset a C in another class.
Once you understand the process (which others will post in more detail), have a discussion, now, with your student about what might happen (consequences) if they cannot maintain that GPA to keep the scholarship. That’s the ‘skin’ they have in the game. Good luck!