Yes, it is tax free.
The sum used to be £108.50 taxed. when it changed to untaxed NATS droppped it to £100 which meant more in your pocket and less on NATS outgoings - as Odi said, everyones a winner.
You also get to claim car mileage for a trip home every month. So if you live a fair distance away, it can add up to a nice extra sum. When I was a Student you didnt have to prove you had done the journey. So they relied on you being 'honest' when you claimed it.
Obviously every one went home once a month
Salary is very good considering there is an outside chance of some not making the full distance. Oh and by the way - since the SATC course is registered as a full time course of further education - you are classed as a full time student, so you can get all the benefits that goes with that too (such as a railcard even if you are over 26, and free council tax if you are in a house entirely occupied by students i.e. sharing with other SATCs!!)
Good Luck!