"1098-T shows I received about $4,000 more in scholarship than the reported qualified expenses (the scholarship included room & board)".
ROTC scholarships usually only covers tuition, fees and course materials. It sounds like you have other scholarships, in addition to ROTC. There is an option for you to choose the ROTC scholarship to be for room and board, if you already have other scholarships paying tuition. I can find not source saying that the ROTC scholarship is still tax free in that situation. In fact, most sources infer that it is taxable (<a rel="nofollow" target="_blank" href="
http://www.ehow.com/info_8747258_tax-treatment-rotc-payments.html">http://www.ehow.com/info_8747258_...>). As such, I have changed my answer above.
