I know. I really struggled with it. It makes sense, but then I started thinking do I need to reconcile how the scholarship was "used?" You know how some 1098ts will show the scholarship but also list an amount pay (which may also include cash above the scholarship amount). Given the amount of educations credits I work on, I was actually surprised this hasn't happened before. And I am just not seeing exactly this example out there. So I might be over thinking it (like the schedule C example you used) or I might be missing something important - such as the tuition the scholarship actually paid? Thanks for your thoughts!