Who/what is the foundation? And why are they paying off your loan? That determines whether it gets entered as "other income" or as "scholarship", and whether it is taxable.
I disagree with the other reply. You do not enter it at both the 1099-Misc screen and again at the education section, as scholarship. It will get double taxed, if you do.
I also disagree with your conclusion that you "know this is definitely not taxable". It's not definite. Anything on a 1099-Misc is always taxable, unless the 1099-Misc was issued in error. Scholarships are not supposed to be reported on a 1099-Misc. Tax free scholarships must be used to pay for qualified expenses (tuition). Repayment of a loan, even a loan used for tuition, is not a qualified expense.
It usually doesn't matter if the income is reported as other income or scholarship, unless you are a dependent, on someone else's tax return.
There's another issue. While you were going to school, were either you or your parents claiming a tuition credit, based on the expenses that were being paid with your loan money?
