Also, I like thinking about this non-taxable / taxable question differently.
1) ALL scholarship income is taxable income to the student.
2) it can be reduced by any Qualified Educational Expenses (QEE)
3) if the result is positive, the net is reported on the student's tax return as taxable income
4) if the result is negative, the net is reported on the return of whomever is claiming the student (normally the parent's) as part of the calcuation for the AOC tax credit.
that is a simplified explanation on how this works.
