Q. I know that room and board do not count for educational credit, I am more unsure of when determining excess scholarship (taxable part of the scholarship). Since the university provided these numbers officially, I wonder if I should use them?
A. Simple answer: No. Room and board (r&b) are not qualified expenses for scholarships to be tax free.
Q. Since the university considers them qualified/requires of students, are they then more of a fee?
A. No.
The fact that the school has erroneously included r&b in box 1 of the 1098-T does not change that. The school appears to be relying on the wording in Publication 970, "Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses". But the next paragraph, in Pub 970 (page 6), specifically says:
"Expenses that don't qualify (for tax free scholarship).
Qualified education expenses don't include the cost of
• Room and board".
https://www.irs.gov/pub/irs-pdf/p970.pdf
