Q. Question about first student, that $7k is recognized as scholarship income. Does that free up any of that $7k for use with 529?
A. Yes, it frees up all $7K.
Q. Is that a double dip if the room and board portion of the scholarship is being recognized (as required) as income?
A. No. Since the scholarship is taxable income, it does not have to be allocated to room & board. The student is free to spend or allocate that money to anything, including a trip to Ft. Lauderdale. So, you are free to allocate the room and board expenses to the 529 distribution.
"Done with AOC after 4 years"
The 4 times and 4 years limits are per student. If you have 2 student dependents, you can claim it 4 times on each student, during their undergrad years.
