"a 1099-MISC has been issued and taxes are paid on that amount."

Has it always been reported in Box 7? If so, that no longer exists; the transition is to 1099-NEC, an old form that is reactivated to replace Box 7.

"The company that issued the 1099-NEC had already overstated the income on the form."

Is your taxpayer the name on the 1099-NEC or the student? It's not overstated Income if it matches Gross. Or, other components of value were included, and that is part of Gross. For instance, referral fees.

"The stipend that the taxpayer receives"

If it used to be 1099-Misc Box 1, it should still be there, because that is Rent. Not Stipend.