We received an interesting question from one of our tax students where they encountered a situation where a Native American tribe directly paid the college tuition for a member of the tribe and the tribe member received the 1098-T showing the tuition amount. Because the tuition was paid by the tribe the tax preparer was hesitant to claim an education credit for the taxpayer.

Actually, that is no different than grandpa paying the tuition. According to Reg Sec 1.25A(b):

If a third party (someone other than the taxpayer, the taxpayer's spouse, or a claimed dependent) makes a payment directly to an eligible educational institution to pay for a student's qualified tuition and related expenses, the student is treated as receiving the payment from the third party and, in turn, paying the qualified tuition and related expenses to the institution.