The answer to your query is yes.
- Scholarships: Can be used for the qualified education expenses of tuition, books, and lab fees. That's it. But the lab fees category is rather broad.
- Grants: Same as scholarships. But if the grant letter states it can be used for other expenses such as room and board or transportation, that's fine so long as those items outside of the qualified education expenses are in support of the education.
- 529 Distributions: Can be used for tuition, books and lab fees, as well as room and board. But still, the room and board must be in support of the education. For example, if the student is not enrolled as a full time student (or more than half time) for the standard June-July summer semester, then room and board for those months is not considered in support of the education and is therefore not deductible as such.
Also, a further breakdown/clarification for room and board.
Room: What the student pays for housing. this would include the cost of utilities also, such as electric, water, internet (if required for any class, and it usually is). However, if the student is living off campus the amount claimed is the lesser of what the student actually pays, or what it would cost to live on campus. The only exception to this would be if the student has a letter from the college stating that on campus housing is not available for the semester. A letter would be needed for each semester. But even then, costs would have to be reasonable for the locale. In other words, no $5K/mo penthouse suites.
Board: What the student pays for food. Typically, many colleges offer a meal plan where the student pays a fixed price for 3 meals a day, 7 days a week. That's usually the most costly plan. If living off campus, what the student claims for food can not exceed the lesser of what they actually pay, or the cost of a meal plan on campus. The exception to this is if the college does not offer meal plans, or they have a letter stating on campus housing is not available for the semester. A letter would be needed for each semester. But even so, food costs are expected to be reasonable for the locale. So no steak & lobster everyday for lunch and dinner, of course.
