Dependant college student filing income

Yes, even if he has some income to report, you can and should claim him as a dependent, on your tax return.  If the excess is less than $12,200 and it is his only income, he is not required to file a tax return.

You say the amount includes grants/scholarships and loans.  For tax purposes, loans are not treated as income.  Expenses paid by loans are considered the same as expenses paid out of pocket.

As to the tuition credit, there is a tax “loophole” available. The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, as income on his return. That way, the parents  (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship.  You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.

Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.