This report analyzes data from 2001-2017 to examine public four-year universities' spending on financial aid dollars--specifically between non-need-based and need-based aid. Our researcher found that these universities have spent nearly $32 billion of their own financial aid dollars on students who lack financial need, according to an analysis New America conducted prior. About $2 out of every $5 these public universities provided went to non-needy students--those whom the federal government deems able to afford college without financial aid. For generations, public colleges and universities, with the help of the federal government and states, provided a low-cost higher education to students in their home states. By keeping their prices low, these schools offered students from low-income and moderate-income families a gateway to the middle class. The more public universities engage in these practices, the harder it gets for others to resist for fear of putting themselves at a competitive disadvantage. As a result, schools that provide generous amounts of non-need-based aid cannot rest easy. They have to keep ratcheting up their scholarships or discounts to try to stay ahead of their competition, creating an ever-expanding arms race. Our analysis shows this "merit-aid" arms race at work.