Here is the problem if you do not send in the Financial Aid forms to some schools. There is, yes, the merit issue sometimes. But the more insidious issue is that if your family needs that financial aid in the future, you might not be eligible because the school accepted your student on the assumption of no need. I think it’s danged nasty and sneaky that this is not made VERY clear at such schools, but it often is not. Most people don’t think of this. You might have another child entering college, or some horrible disaster happen, and you are not eligible for aid because you didn’t file at the onset. Job loss, illness, death, catastrophe. Things happen in life.
There is also the fact that you need to file FAFSA for access to federally backed loans like Stafford and PLUS.