If you made the distribution, the 1099-Q is issued to you and you are liable for the tax.
If the student makes the distribution, or the funds are transferred directly to the school, the 1099-Q is issued to the student and the student is liable for the tax.
This is based on tax law and that is how the TurboTax program is set up.
If there is taxable income generated by the 1099-Q, the person listed on the 1099-Q is responsible. If the funds were used to pay education expenses, there would be no taxable income unless the expenses are used for a credit. If you select the student as the recipient, the tax doesn't necessarily go away, but it would be reported on the student's return, not yours.
IRS Pub 970
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