You CAN legally claim an education credit if you shift some of the scholarship funds to pay for ineligible things like room and board and have the student count that portion of the scholarship as taxable to the student (which may or may not require the student to file a tax return). This is a perfectly legal way (and explained in the government tax literature and in the TurboTax software) to get at least some of the credit, if not all.
Unfortunately, it is not obvious in TT how to do this on both the parent and the student tax returns - and is not exactly easy to juggle both returns to figure it out. It takes trial and error to figure out the exact amount to shift in order to get the highest credit possible and off-set the possible increased tax owed by the student on both the Federal and State returns. Some students will owe nothing if their income does not go above the threshold for filing a return.
