Erma Bradley has a grandson named Kevin who is claimed as a dependent on his parents' joint return. Erma paid Kevin's tuition directly to the university. For purposes of claiming an education credit, Kevin is treated as receiving the money as a gift and paying for the qualified tuition and related expenses.
Since Kevin's parents are claiming him as an exemption, they may be able to use the expenses to claim an education credit. Alternatively, if Kevin claims himself on his return (and his parents do not), he might be able to claim the expenses as if he paid them himself.