No it's not incorrect. All scholarships, grants, 529 funds are taxable income "initially". Their taxability is offset by the *qualified* education expenses they are used to pay for. Just enter the 1098-T exactly as printed, then press on through the rest of the education section.

The only qualified expenses for scholarships, grants and out-of-pocket monies is tuition, books, lab fees. That's it, with no exceptions - though "lab fees" is rather broad.