<p>pan1956, this is not based on logic; there is a specific section of the IRS tax code that applies. I think it should be tax deductible, but no one is out there listening. It is sometimes a problem if the grant is over the amounts that are excluded (i.e. room and board is not excluded) because then tax will be due. Maybe the institution grosses the grant up to include taxes, but this is not something I have experience with, or expect to.</p>
<p>[Publication</a> 970 (2008), Tax Benefits for Education](<a href=“http://www.irs.gov/publications/p970/index.html]Publication”>http://www.irs.gov/publications/p970/index.html)</p>