Yes, it is "taxable income". Whether you need to pay tax on it depend on other things, such as your filing status and other income, but YES, you need to report it as taxable income.
There is a difference between "can be used" and "must be used".
If you apply the scholarship to room and board, that will make the scholarship taxable income.
If you apply the scholarship to tuition fees and supplies, that will make the scholarship tax-free.
It sounds like you would have the option to allocate either way.
HOWEVER, If all your tuition, fees and supplies were covered by a different scholarship, you have no choice but to apply this scholarship to room and board.
Even if this scholarship "specifically states it can be used for room and board" it is still taxable income.
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