I have seen this happens! It adds it as wages. I believe it has something to do with the scholarships exceeding the tuition. Do you have the student linked to the 1098T and code S as dependent code?  Its correct. i can't recall the publication... I do remember reading it about 6-8 years ago!

Sorry I'm not much help, but I have seen it!

Andrea Hogan-Carter

Hogan Tax Services