"they would report it in income section and then take a deduction for the amount paid in education section"
Yes, it is common to intentionally make MORE of the scholarship taxable in order to claim the American Opportunity Credit.
"they can get around kiddie tax reporting it as earned income"
No true. The Kiddie Tax is very clear what is earned income, and for purposes of the Kiddie Tax, scholarships are unearned income.
"Also with elimination of exemptions, students scholarship can qualify as their own support and then the student should claim themself"
No. Section 152(f)(5) specifically says if the person is a child of the taxpayer, scholarships are NOT considered as paying for their own support, so that would NOT allow them to claim their own exemption. That fact that the exemption amount has changed to $0 does not change that.
