Most of the LHB scholarships come from donations that LHAB members have made over the years, going back to the 60s. They literally "pass the hat" at reunions for donations. I think it's the same hat from decades ago. There are lots of little LHB/LHAB traditions and the alumni hat is one of them.
The scholarships are small although they are growing. I think most of them are 100's of dollars. No one is doing it for the scholarship. LHB is an awesome place to meet people from across the university, have fun and do something a little different if music is not your major. I'm not that plugged in to alumni band, but I think LHAB is trying to give out small scholarships to many band members, so that eventually everyone gets a little bit.
Standing with your friends in the middle of the band after a win, having the football team come over while celebrating, and then playing the Eyes of Texas is an awesome experience. I wish everyone could have it.