Tuition qualifiy for education credit, form 8863?

[SM S]

My daughter goes to private college, and the tuition was about $40,000 each year. In the first two years, either my salary level does not allow me to take any credit, or my daughter can't claim it, since she has no income.

She started to work on 3rd and 4th year of college and she was no longer my dependent, since she started to work part time and get paid. Can she claim the education credit, for her 3rd year and 4th year tution paid via form 8863? I was confused about something you can only claim for 1st and 2nd year in college.

She just graduated from college in 2007, for spring semester 2007, it was paid in January 2007 for $15,000, but it was billed by school in 2006. The 1098-T was received in 2006, but indicated in box 7, a portion was for Jan/March 2007. I have the cancelled check, issued on 1/2/2007 and cashed by school on 1/5/2007. Can she use this to claim education credit on 2007 8863 form?

Thanks