Yes, you understand it correctly. Your son reports $7708 of taxable scholarship income on his return and you report $3267 of qualified educational expenses on your tax return. If you or your son are out of pocket for any additional expenses, like books and other course materials, you may add those cost to the $3267.
You have effectively received a 1098-T, by being able to retrieve it from the web site. The school has "Issued' a 1098-T and the requirements of the law have been met.
The stuff about earned income being more than half the student's support is only applicable if the student wants to claim the AOC credit on his own return. The rule does not apply when the parent(s) is claiming the AOC.
You essentially have to use a work around in TurboTax (TT). Here's how I would do it. Enter the 1098-T, on your return, but only enter $3267 in box 1. No other numbers, except book costs at the books screen (if you have any). You only enter the 1098-T to get TurboTax to check the proper box on form 8863. Lying to TurboTax to get it to do what you want does not constitute lying to the IRS.
On your son's return, Enter the 1098-T with $7708 on box 5 and 0 in box 1.
