Scholarships and Fellowship Grants
are taxable unless they meet all of the following
conditions:
1. The primary purpose of the grant is
to further the recipient’s education or
training; and
2. The grant does not represent payments
for past, present, or future services or
payments for services that are subject
to the direction or supervision of the
grantor (e.g., a fellowship given in exchange
for teaching); and
3. The grant is not for the benefit of the
grantor.
http://www.state.nj.us/treasury/taxation/pdf/current/1040i.pdf at page 26.
