I participated in College IL, a tuition reimbursement plan. paid for 6 semesters. i didnt use all i paid in so returned as earnings and additional income? why?

Yes, it's taxable but not exactly and maybe not at all. College Illinois is a standard 529 plan.  If the distribution is used for qualified expenses, it is not taxable.  In addition to tuition, fees, and books;  computers and room & board are also qualified expenses, even if you live at home. 

The distribution will be reported on IRS form 1099-Q. 

Total qualified expenses (including room & board) less amounts paid by scholarship less amounts used to claim the Tuition credit equals the amount you can use to claim the earnings exclusion on the 1099-Q. 
Example:
  $10,000 in educational expenses( including room & board)

   -$3000 paid by tax free scholarship

   -$4000 used to claim the American Opportunity credit

 =$3000 Can be used against the 1099-Q 

Box 1 of the 1099-Q is $5000

Box 2 is $600

3000/5000=60% of the earnings are tax free

60%x600= $360

You have $240 of taxable income (600-360)