If it is "Qualified Tuition Reduction" it is not reported and not taxed'
According to the IRS:
"If you receive a tuition reduction for education below the graduate level (including primary, secondary, or high school), it is a qualified tuition reduction, and therefore tax free, only if your relationship to the educational institution providing the benefit is described below.
You are an employee of the eligible educational institution.
You were an employee of the eligible educational institution, but you retired or left on disability.
You are a widow or widower of an individual who died while an employee of the eligible educational institution or who retired or left on disability.
You are the dependent child or spouse of an individual described in (1) through (3) above.
Child of deceased parents. For purposes of the qualified tuition reduction, a child is a dependent child if the child is under age 25 and both parents have died.
Child of divorced parents. For purposes of the qualified tuition reduction, a dependent child of divorced parents is treated as the dependent of both parents.”
If the tuition reduction is not qualified, and it sounds like it isn't, the student needs to claim it as income.
If the class is worth 2,000 and the school gave the student a reduction of 1,500, the student claims 1,500. On the 1098-T Box 5 should show 1500 and box 1 should report 2,000.
If box 1 does not report what was paid, including the reduction, click the "what if this is not what I paid?" link under Box 1 on the 1098-T screen and enter the full amount.