Maybe.
Grad students are not eligible for the more generous American Opportunity Credit (AOC). You are eligible for the Lifetime Learning Credit (LLC). But only tuition and fees are eligible expenses, not books and computers and supplies.
If your scholarship is not restricted to tuition, it is possible to free up tuition, for the credit, by paying some tax on the scholarship. The write-up below describes the AOC, but the "loop hole" works for the LLC as well (you need $10K tuition to get the max LLC).
There is a tax “loop hole” available. The student reports all his scholarship, up to the amount needed to claim the American Opportunity Credit (AOC), as income on his return. That way, the parents (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship. You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.
Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.
The LLC is a non refundable credit. It can only be used to offset an actual tax liability.
