You should get a 1099-Q for the distribution in the name of the student.
The student should also get a 1098-T from the school, although it might need to be printed off her online account.
True, if the distribution subtracted from the tuition leaves no education expenses, there would be nothing to report, however if the distribution can be allocated to "Other" education expenses, such as room and board, you are allowed to do that if the tuition, fees, books and supplies allow you to get an education credit.
If the distribution is allocated to these "Other" education expenses, the student would need to claim those funds as income, but depending on the amount, may or may not owe tax on that income. Regardless, there would NOT be the penalty tax.
Education credits can be complicated. In your situation (distributions = expenses) you may leave the 1099-Q and 1098-T off the return, OR you can re-allocate and claim a credit if applicable.
IRS Pub 970 is easy to read and has a lot of information you may find useful.
IRS Pub 970
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