According to the IRS, the gross income test for claiming a qualifying relative includes "all income in the form of money, property, and services that isn't exempt from tax." This does include certain scholarship and fellowship grants. Since the grant is deemed taxable after entering the education expenses, his taxable income exceeds the limit to be claimed as a qualifying relative.
Here is a link to Publication 501 which discusses the requirements for claiming a qualifying relative: Publication 501
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