Q. Can he deduct any of those expenses?
A. Yes, sort of.
Instead of a tax free employer paid educational benefit, what this turned out to be was a loan. As such, your grandson ended up paying for his own education. If that school they sent him to, was an "eligible institution", he can count the tuition paid in calculating and claiming a tuition credit. If he is still his parent's dependent, they can claim the credit, instead.
He claims the credit for the year the tuition was paid. For example, he went to school in 2022, but paid the money back in 2023, he (or his parents) would need to file an amended 2022 tax return to claim the credit.
To be eligible for the tuition credits, the course must be taken at "an eligible institution". The school should be able to tell you if it is an eligible educational institution. In general, an eligible educational institution is an accredited college, university, vocational school, or other postsecondary educational institution, including accredited, public, nonprofit, and proprietary (privately-owned, profit-making) postsecondary institutions. Additionally, in order to be an eligible educational institution, the school must be eligible to participate in a student aid program administered by the Department of Education. If they issue a 1098-T they are probably an eligible institution.
Enter your school at the link below, to see if it's on the dept. of education list.
https://ope.ed.gov/dapip/#/home
As the other reply said, just the paying back of the money would not qualify for any kind of deduction.
