Estimated refund went down as I entered my wifes education deductions? What gives? Do I have to add a schools 1098-T?

Q. What gives?

A. The most likely explanation is that box 5, of the 1098-T, is larger than box 1.  This usually means that some of her scholarship is taxable

Q. Do I have to add a schools 1098-T?

A. No. The 1098-T is only any informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit or deduction or possibly your student has taxable scholarship income. 

If you claim the tuition credit, you do need to report that you got one or that you qualify for an exception (the TurboTax interview will handle this)

You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T. In the 1098-T screen, click on the link "What if this is not what I paid the school" underneath box 1. You will then be able to enter the actual amounts paid. The rest of the TurboTax interview will allow you to enter additional expenses, like books.  Scholarships used for room & board and other living expenses is taxable.