Merit and need based aid used for QEE is not taxable. My daughter had aid used for room and board and that was taxed to her, not at a kiddie tax rate. Now with the standard deduction being $12k+ per year, I think most students wouldn’t owe that much (depending on other income)
529 funds can be used for room and board and not taxed. That’s why Florida schools apply pre-paid tuition/room first (if the student has both FPP and other scholarships/grants) and then refunds things like grants, Bright Futures because those will then be taxed to the student.
Be careful with combining all the funds. My daughter’s school (private) would NOT refund merit or grants from certain sources, mostly their own funds and BF (BF allows the schools to decide, and this school would not refund BF), so all her school merit and grants, and BF had to be applied first, then another grant she had could ONLY be used for tuition, so that was applied early in the list too. Things like Pell grants could be refunded so those were applied last.