Do you have any reason to believe that the status of the loan, and whether or not it's forgiven, is relevant to determining the credit amount?

If the credit is determined by expenses paid....then is it best to not include the credit if no payment has actually been made?

I appreciate your reply....as that really is my question. Is the status of the loan relevant to the eligibility of the education credit?

1098T box 1 clearly states $4066 as expenses paid. The taxpayer just says that no payments have been made. These are loans that they hope to get forgiven due to a disability. 

The taxpayers concern is that taking the credit may affect the loan forgiveness process somehow. Or that they would have to pay the credit back at a later date.

When you read Pub 970 (https://www.irs.gov/forms-pubs/about-publication-970), did you see the paragraph that says:
"Paid with borrowed funds. You can claim an American opportunity credit for qualified education expenses paid with the proceeds of a loan. Use the expenses to figure the American opportunity credit for the year in which the expenses are paid, not the year in which the loan is repaid. Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account."

When you read the instructions to Form 8863 (https://www.irs.gov/pub/irs-pdf/i8863.pdf), did you see the sentence that says:
"It doesn't matter whether the expenses were paid in cash, by check, by credit or debit card, or with borrowed funds."

Both of those sources include information on when a credit is recaptured; loan forgiveness is not a consideration.

The normal rules for debt forgiveness apply. See https://turbotax.intuit.com/tax-tips/college-and-education/can-debt-forgiveness-cause-a-student-loan... particularly the sentence "If you die or become permanently disabled, neither you nor your estate will be hit with a tax bill for forgiven debt under federal student loan programs."

The standard for student loan forgiveness for disability is "total and permanent disability." See also https://studentaid.gov/manage-loans/forgiveness-cancellation/disability-discharge . Whether you claimed an education credit is not part of the process.