Q. I understand that I can claim him, the question is whether he should file independently in order to get additional government support via FAFSA?
A. No. If he CAN be claimed, he cannot file independently. That is, even if you don't claim him, he must check the box, on his form 1040, that someone can claim him. Whether FAFSA will accept that is a question for them; but I doubt it.
You said "His school and ROTC financial advisers have told him he is a contractor for the government now". That's not correct, for an ROTC scholarship (there's a grain of truth for Military Academy cadets, but not ROTC). ROTC scholarships and monthly stipend students received from ROTC are, by law, exempt from tax. His ROTC scholarship is not reportable income and, as others have said, it is also not counted as self support, for the dependent support test.
You also said "he lived with us over the summer". It matters where he lived prior to going off to school, whether it was with you and your spouse or the other parent. A student is usually considered as still living with the same parent after he goes away to school. But, either way, somebody CAN claim him and he cannot file "independently".
