Scholarships, grants and 529 funds not used for *qualified* education expenses are taxable income *to the student*. Even though it's the student that will pay taxes on that money, it will be taxed at the parent's higher tax rate. So if there are excess funds, the last paragraph of the answer above applies to you.
For scholarships, the only qualified education expenses are tuition, books and lab fees. That's it, with no exceptions. But the category for lab fees is rather broad.
For 529 funds reported on a 1099-Q the only qualified expenses are tuition, books, lab fees *and* room and board. Now don't forget that the cost for the "room" part is more than just the rent. It includes the cost of utilities too. Then there's even more folks that don't even consider the "board" part. I'm sure the student had to eat while they were in college, and that their food was not free.
So after taking into account everything for room and board, if there is still excess 529 funds, then the last paragraph of the answer above, applies.
