I am an independent student with no taxable income. When I file taxes, I do not need to pay any income tax and get no refund. Some students told me that I can get up to 20% of my tuition fees refunded if I file for Lifetime Learning Credit when filing my taxes. Can I receive such money or does that only apply to people who paid taxes? Is this really just a discount on the amount one pays in taxes to the IRS?
You were told wrong.
Lifetime Learning Credit is not a refundable credit. I.e.: it reduces your tax liability, but you cannot get refund if it exceeds your tax liability. See the IRS pub 970 for more information:
A tax credit reduces the amount of income tax you may have to pay. Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. The lifetime learning credit is a nonrefundable credit. This means that it can reduce your tax to zero, but if the credit is more than your tax the excess will not be refunded to you.