However, it is not "required" to be used for those expenses. It can be. Same as Ch 35, same as BAH. It is paid directly to you (and not the school). I understand your argument, but "required" is my hang up. If I'm not restricted to ONLY being allowed to use it for education, then I'd argue it is not "required" to be used for education expenses. If I had to return any unused portion and prove with receipts that it was used for educational expenses, then I'd agree with you.
Publication 970:
"You don't subtract any amount of the BHA because it was paid to you and its use wasn't restricted."
Also Publication 970:
"If you qualify for one or more of the education tax benefits discussed in chapters 2 through 11, you may have to reduce the amount of education expenses qualifying for a specific tax benefit by part or all of your VA payments. This applies only to the part of your VA payments that is required to be used for education expenses."
