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The scholarship or fellowship grant have to be one that may qualify as a tax-free scholarship under the foundations discussed in chapter 1. Also, the scholarship or fellowship grant must be one that will (by its terms) be used for nonqualified expenses. Finally, the amount of the scholarship or fellowship grant that is utilized to nonqualified bills cannot exceed the quantity of the student’s precise nonqualified expenses which might be paid in the tax year. This quantity could differ from the scholar’s dwelling bills estimated by the scholar’s school in figuring the official cost of attendance under scholar help guidelines.

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