Even though you've claimed the American Opportunity credit the maximum 4 times, you should still be eligible for the Lifetime learning credit (LLC). It's worth 20% of your tuition up to $10K. Depending on your tax bracket (or your student's bracket), it may be better to pay a little tax on his scholarship or the 529 distribution.
Essentially most students don't pay any tax on the first $12,400 of taxable scholarship.
