Inherited IRA non-spouse (how to distribute tax efficiently)

My daughter was the beneficiary of an inherited IRA from her grandfather over 10 years ago when he passed away. He -- and we as parents -- fully intended for these funds to be used for college tuition expenses (as it happens, private tuition). Our daughter is 20 and remains our dependent. We fully planned for tuition to come from these resources, even though we are supplementing with a 529. The question is, how do we minimize her tax burden on the IRA distributions since we are in a 32% tax bracket? She is heavily penalized by the IRS by our income level (kiddie tax!), and the college heavily penalizes her (no financial aid) given the IRA assets in her own name. What is the most tax strategic way to distribute her IRA? It seems very challenging to minimize her taxes owed on distributions. I know we are in a fortunate situation, but this directly pits my own retirement against her college tuition, and seriously erodes the IRA funds available for tuition given the tax treatment.