Maybe I'm wrong, but I seem to recall reading that the program automatically allocated $4000 out for purposes of claiming the American Opportunity Credit, which may be why it is trigger the 1099-Q to be taxable.
However, you said your income is too high to qualify, so *IF* the program is doing that, I'm not sure how to undo that. But again, I could be completely wrong about that, but that is what is sticking in my head.
I think that @Hal_Al is very knowledgeable about this, so perhaps he could give you some ideas.
