Yes, you understand correctly.
The IRS phases out the education credit by income for the person claiming the student.
The dependent student MAY claim the non-refundable portion, but the dependent student CANNOT receive the refundable portion.
Additionally, the dependent student is not able to claim his/her own exemption (although there is no exemption amount this year) BUT the person that CAN claim the dependent CAN'T either in this case. For the dependent student to take the non-refundable portion of the credit, no one can claim the student.
