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@Colmatt1 wrote:

Parent can claim both and income low enough to qualify from AOTC.  

I thought if parent doesn’t claim them as dependents then they could claim college expenses, not getting refundable credit but reducing their tax burden. 

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In #1, the son has no tax, so there is no point in the son trying to claim a non-refundable credit.

The parents would potentially get the $500 dependent credit (assuming they otherwise qualify and can use the credit).  If at least $14,000 of the scholarships were non-restricted, the parents may also potentially get the $2500 American Opportunity Credit (assuming they otherwise qualify and can use the full credit).

In #2, while the daughter can benefit from some of the nonrefundable credit, the circumstances seem similar enough to #1 that it seems likely the parents will benefit more from claiming her as a dependent (especially if there at least $14,000 of non-restricted Scholarships, and the parents have enough tax to use the non-refundable credits).

Scholarships rules vary, so whether it is unrestricted (or can be used for room and board) will depend on the exact scholarship.  Unfortunately, it is often difficult to find out.