It should go on her return and yes, she owes, because the scholarship that is in excess of her tuition is considered taxable income. Only the amount that was used for Qualified Education Expenses which would be tuition and materials, equipment and books required for the courses but bought elsewhere such as a laptop. If she bought a laptop or calculators or books, this can lower her taxable amount of scholarship.
Any amount used for room and board or travel is NOT considered educational expenses. This portion is 100% taxable.
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