Education Credits and Grants

Yes, I think I understood your question.

I will try to answer more clearly:

The answer is Yes he can claim the grant as taxable (potentially) income and free up expenses for an increased Education Credit PROVIDED the grant was not issued to be used for a specific purpose (sometime the grant will be for tuition only, but that is very uncommon) and that he has "Other Education Expenses" to allocate the grant to. 

For example, Room and Board expenses are "Other Education Expense". A Taxpayer can allocate educational assistance, such as Pell grants to those expenses. If done, the educational assistance becomes (potentially) taxable income for the student, however doing so might free up "Education Expenses" that count towards a credit, like Tuition, Fees, Books, and Supplies. 

Say the student had a distribution from a 529 plan that covered Room and Board. In this case the student cannot allocate the Pell grant to this same expense. 

The student cannot just decide to report the Pell grant without something to match it to. 

The IRS talks about "Education Expenses" (tuition, fees, books, supplies) and "Other Education Expenses" (room and board). 

If the Pell grant is allocated to "Education Expenses", the Pell grant is not taxable and the expenses can't be used for a credit. 

If the Pell grant is allocated to "Other Education Expenses", that amount is reported as income by the student. Additionally, if doing so frees up "Education Expenses" those expenses may be used for a credit.