Q. Will the refund of approx $10K automatically be taxable because it's a "refund"?
A. No. Anything used for books and "course materials" (including computers and software) are qualified expenses and reduce the taxable portion of the scholarships.
If he receives $25K in scholarships and and only pays $3K for qualified expenses (tuition, fees and course materials), then he has $22K of taxable income. Room and board are not qualified educational expenses. But, he should actually claim the entire $25K as taxable income, so that the parents can claim the $3000 of qualified expenses for the American Opportunity Credit
