I worked for this community service and they gave me a grant to pay off my Sallie Mae Loan, this grant is only use to pay school loan, you can't do anything with it, so I used it to pay my loan. Now they send me a 1099-MISC form, in box 3, it show "Other income" and the amount that they gave me. Do I consider it as an income? I don't think it is an income because it only be used to pay the loan but I am totally unsure, please help, thanks.

Yes, this is self-employed income. You will file schedule C to report this income and expenses to earn this income. On the net income you will pay SE tax at 15.3%.

On your tax return you can deduct Tuition fee deduction and student loan interest deduction, if you qualify.