Are the Vita people using a tax program like turbo tax? I know TT isn’t always right, but I found it, and tax act, handled this easily last year. When I did my return, TT informed me my child might have taxable income on her scholarships (she did). On her return (used tax act), it asked for my information to get the tax rates for her unearned income rate.
It was just as all the discussion of CC says that Pub. 970 treats scholarships, credits, and student income.