Right, but the taxable portion is listed on the student’s own tax filing under other income Line 1a and treated as taxable income in the taxing part on the student’s form. (rather than as investment type income).
Because dependent or not, 529 or none, if they are getting room and board, it is likely they need to pay taxes on that “income” but the standard dependent deduction goes up per the 929 definition. I think.?