Question about American Opportunity Tax Credit

Hello, I am helping a friend with taxes and am finding conflicting information about the AOTC and if my friend can qualify. On the 1098T for college expenses, if he has more in box 5 (scholarships) than box 1 (tuition expenses paid) is it still possible to get the credit?

For context: $7K paid in tuition, but received $10K in scholarships. Is it possible to allocate $7K of the scholarships to “non qualified education expenses” such as room and board, etc and then be eligible for the full AOTC based on $4K of tuition expenses not covered by scholarships?

In free tax USA I can technically do this and then the AOTC is triggered, but I am questioning if that is legal.

Thanks!