"and is excludable from income even though there is a future service obligation"

They are not being paid now for future obligation. Did they do qualifying work now?

"You are a candidate for a degree at a medical school. You receive a scholarship (not under any of the exceptions mentioned above) for your medical education and training. The terms of your scholarship require you to perform future services. A substantial penalty applies if you don't comply. The entire amount of your grant is taxable as payment for services in the year it is received."

From: https://www.irs.gov/pub/irs-pdf/p970.pdf