American credit loop hole for education credit

[lcolantuoni14]

I have twins that just graduated from college in May. I never took the American education credit because my son had a large scholarship and Turbotax said that we didn’t qualify during the interview. 
i’m now reading something about a loophole and I’m wondering if I missed the boat over the last four years. But for at least this year which would cover their last year of college is it possible to claim that credit if his scholarship was very very large and he has a twin sister that also had a scholarship where the 1098T showed a higher box 5 but not as much. 
and does it matter if they are filing independent versus as a dependent can somebody explain this loophole? 

[Bsch4477]

Anyone who falls within the income guidelines and is paying $4,000 or more in educational expenses per year will be eligible for the full $2,500. Each of your students is eligible for their own credit. 

The loophole you mentioned is this. If the scholarship is greater than qualified expenses (tuition, books and any required fees) you have discovered that you can’t take the credit because all of the expenses have been covered by the tax free scholarship. BUT if you don’t use the scholarship to pay for those education expenses, you are then free to report that you paid for them yourself and so can take the credit. The scholarship amount will be income to the student but lacking other income they probably will not have to file anyway. So “tell” the program that you didn’t use $4,000 of scholarship for education expenses. By all means you should claim your students as dependents. You can’t get the credit otherwise.