The $4426 is not the taxable amount. The taxable amount is 4426 / 12000 = 36.9% of the amount in box 2 of the 1099-Q (the earnings portion of the distribution).
If he has no (or little) other income, it's actually better if he declares $4426 of his scholarship to be taxable, rather than a portion of the 1099-Q. This is because scholarship income is treated as earned income for purposes of calculating a dependent's standard deduction. This usually results in no actual tax for the student.
