A scholarship is a payment made to or for the benefit of a student (either graduate or undergraduate) to aid the individual in their course of study.

• A qualified scholarship is an amount received as a scholarship grant that covers tuition, fees, books, supplies, and equipment required for instruction at the educational institution. No withholding or reporting is required.
• A nonqualified scholarship is an amount issued for any other purpose, including travel, room, board, research, etc. This amount is subject to federal tax withholding and reporting.

The amounts are taxed at a flat 14 percent for F, J, M, or Q visa holders and 30 percent for all other visas. Refer to: Treaty Countries List for Scholarship & Fellowships

IRS Publication 970 Chapter 1 has detailed information regarding income taxability and individual tax return reporting instructions.