@Hal_AI, thanks for all your help. Some very interesting tax-avoidance strategies!
I'm going to mark your answer as done, but FYI I do not think I can avoid entering the 1099-Q on my return since, as I stated earlier, that is addressed to me personally, and the funds went through my account. I don't think this matters, though: I think your main point was to move some of the scholarship over to the student's return. Brilliant!
FYI, TurboTax does offer an option built-in to the interview to designate some of scholarship for non-educational purposes, which effectively accomplishes your advice.
FYI, I did this (via reducing the 1098-T Box 5, and again using the TT scholarship reduction), and the tax refund generated by TurboTax matched the same amount as when I reduced the reported room & board expenses. I still think there is something strange going on in TurboTax, but one way or another, I am able to maximize my refund. Thanks!
