These 2 answers from experts just proves my point how confusing this issue is. annetteb6 answer is how I interpret the rules. So if I attend 3 years and get an undergraduate degree and then wait a few years and go to grad school, the first year I would be eligible for AOTC. The IRS example where they say the first partial year of grad school is allowed if it falls under the fourth year to me means that whether you have a degree or not is relevant, what counts is the limit of 4 years of post secondary education.
