Q. However the amount of tuition is $32k and the scholarship is $7 so I don't think this applies?
A. You are correct. None of the $7K is taxable. You've entered something wrong. In particular, be sure you did not say that some of the scholarship was used for room & board (r&b are not qualified expenses for a scholarship to be tax free).
Otherwise, delete the student and start over. Go through the entire education interview until you reach a screen titled "Your Education Expenses Summary". Click delete next to the student's name. You'll then get the "Your Education Expenses Summary" screen again. Click the "Add a student" button.
