The way to enter enter the "loop hole" in TurboTax (TT): when asked if any of the scholarship paid for room & board, answer yes, then enter $12,435 (in the 1st example above) or $11,435 in the 2nd example.
To make some of the scholarship taxable (re-allocate some of the expenses), you must tell TT how much you want taxable by saying it was used for room &board. Note the wording at that screen “or other expenses”. You didn’t have to literally use the scholarship for R&B.
