The word “scholarships” does not mean exclusively merit awards. Lots of schools (at least in my experience) also apply that word to need-based aid. In this context, scholarship and grant are generally interchangeable.
Here is the IRS definition of the word “scholarship” as it relates to tax-free scholarships (found in IRS Pub 970, Tax Benefits for Education):
A scholarship is generally an amount paid or allowed to, or for the benefit of, a student (whether an undergraduate or a graduate) at an educational institution to aid in the pursuit of his or her studies.
No mention of including only merit awards or excluding need-based aid.