kyle.r.hannon,
Yes, scholarships that pay room & board are taxable. Not listing the 1098-T is not a problem in such cases, as long as you know and enter the taxable amount. Many people don't keep good records, and have to rely on the 1098-T to determine the taxable amount (essentially box 5 minus box 1 or box 2)
Furthermore, there is a tax “loophole” available. The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, as income on his return. That way, the parents can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship. You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.
