Related question for super user @Hal_Al. I'm a teacher in rural Alaska. Our school district makes a deal with teachers to pay the University of Alaska directly for their continuing education, for example to add a special education credential, in exchange for the teacher's commitment to work for the district. The teacher must complete the program and then work for the district for X number of years, and then they don't have to repay anything. If they fail to complete the program, or decide not to work for the district for the required length of time after completing the program, then they have to repay the district, and sometimes with interest.
My question centers around if this is a "scholarship or grant" (1098-T box 5) or a loan. It seems to me it's a loan, which would make us eligible to use the full amount paid by the school district on our behalf to qualify for the lifetime learning or american opportunity credit. But when we get our 1098-T forms, the amount in box 5 matches the amount in box 1. I think the university assumes, since it's paid by our employer, that it's "free" money. And it might be forgiven down the road, or it might not be, depending on what happens in the future. Quite a few people do not end up fulfilling the service time requirement and have to repay (turnover is a huge problem here). Do you have an opinion on this? I know that the instructions to the university say that they should NOT include any loan payments in box 5.
