" I am guessing she has a taxable amount because some of the funds from her 529 plan paid for off campus housing".
No. Room and board, even off campus living (even living at home) are qualified expenses for a 529 plan distribution*. You may use the lower of your actual costs or the school's allowance for on campus students.
*If she had used scholarships for housing, some of the scholarship would be taxable. But the rules for 529 plan money is different.
