The Illinois government has a program whereby state-level lawmakers can give scholarships to state schools to anyone they want to, subject only to the restriction that the recipient live in the lawmaker's district. Not surprisingly, said scholarships frequently go to relatives of lobbyists or campaign contributors.
In another article about this (not the one I liked, I couldn't find this one online) some of the lawmakers defended themselves by saying that they didn't have any role in choosing who got their scholarships - they delegated that decision to a committee. One lawmaker defended his decision to give a scholarship to the wife of "Mr. Williams," a lobbyist, by saying that "Mr. Williams is a decent man - I know him from his lobbying."
Possibly more surprisingly, most of the scholarships don't go to politically connected individuals. According to the article linked above, 83 scholarships over the past 6 years have gone to people with political connections, and 1,509 scholarships were awarded last year. Assuming no year-to-year change this means that less than 1% of scholarships went to people with political connections.
However, here's the question: What's the purpose of this program, if not to give politicians a way to reward their friends? I don't see why this system is a better way of distributing scholarships than a traditional way where everyone can apply and there are designated criteria for who gets the scholarship. The only thing I can think of is that a politician might know someone personally who would be a qualified recipient, but the qualifications don't look good "on paper" - but that goes back to politicians rewarding their friends.