Yes, you can do this.
You are specifically asked in the interview for education expenses, Did you pay for Room and board with a Scholarship or Grant? If you say Yes, then you are asked how much of the Scholarship amount in Box 5 you used for this expense. That's all there is to it.
If you want her to receive an education credit, you have to leave at least $4,000 of tuition expenses unpaid by the Scholarship.
For example, tuition was $10,000,
Scholarship was $20,000.
You would say you used $14,000 to pay room and board (assuming room and board bill was that high),
which would mean only $6,000 used to pay tuition.
Paying that amount of tuition with the scholarship, still leaves $4,000 of tuition expense unpaid, to use for the education credit.
