College grants exceed tuition. Is the difference an income?

Yes, that is income. Turbotax (TT) will normally pick it up from the difference between box 5 and box 2 (or box 1) of the 1098-T. 

If the 1098-T does not have all the info, you are required to add additional info in the follow up  interview.

There is a tax “loophole” available. The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, as income on his return. That way, he can claim the tuition credit on his return.  You can do this because that much tuition was no longer paid by "tax free" scholarship.  You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.

Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 2. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, she can claim $4000 of qualified expenses on their return for the tuition credit