With rare exceptions, the students that receive the most financial aid are the ones who have received the highest grades, most awards, and been to the most programs. Typically, students who have done those things come from financially stable homes of relatively high socioeconomic status. Those financially stable homes are much more likely to be able to pay for college than are the homes of the students who aren't receiving financial aid. So yes, colleges are giving money to those who need it least.
The college student who does not need money is rare. Sure there are some isolated programs that are available to the wealthy but many of the basic programs are so strict that even many people who actually need the help are not eligible due to their family having too much money. Colleges may be giving some money to those who need it least but the bulk of the money is going to those who need it most.