You don't qualify for the AOTC because you paid no expenses (your scholarships paid them, not you).
But, there is a tax “loophole” available. The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, as income on his return. That way, you can claim the tuition credit. You can do this because that much tuition was no longer paid by "tax free" scholarship. You cannot use this loop hole if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.
Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income can not claim the American opportunity credit. But if she reports $6000 as income on her return, she can then claim $4000 of qualified expenses on her return.
