How they figured out?? That is true all international students need to file 1040NR. If you are in Iowa, they do not give you w-but different form which is given to foreigner who earned income in USA. So did you get different than w-2 form to show your income in 2007?

If you have to file 1040 NR, you will not be able to get standard deduction but you can itemize mandatory educational expenses, books and related expenses like lab fees, mandatory school fees (not tuition and health insurance), may able to get your tax liability down and get some refund.

So, please keep records of books and supplies & all mandatory fees. In case of audit, you can submit.