My client is a nursing student and her employer pays the full tuition of $30K directly to the University.  The tuition payment over the $5250 was included on the student's W-2, box 1.

The 1098-T shows $30K tuition in box 1 and $30K scholarships in box 5.

It appears I can't take a tax credit per Public 970 because 'the expenses were paid with a tax-free scholarship, grant or employer-provided assistance'?  Does that mean only the tax-free portion of the employer-provided assistance ($5250) or ALL employer-provided assistance? 

Logically, if the student was given a taxable bonus of $24,750 which she used to pay for tuition and she paid the school directly, she could get the education credit. But since it's paid to the school directly, does she lose that tuition tax credit benefit?

Thank you!