Well it took forever, but I finally got my answer: the award is NOT taxable for international college students, since the entire amount was to be used internationally and is thus considered non-US-source income. The award *is* taxable for students who are US citizens. Here is the language I received from the experts I spoke with:
"These fellowship disbursements are non-US source income, so long as (a) the recipient is a “nonresident alien” for US tax purposes and (b) the fellowships are granted for activities to be conducted outside the US. Because the income is non-US source, it’s not subject to US income tax withholding and not reportable as US-source income.
"A “nonresident alien” is a person who isn’t a US citizen, doesn’t have a green card, and does not spend substantial time in the US. Time spent in the US as a student, however, doesn’t count (that is, students are exempt from the “substantial presence” test for determining tax residency)."
