So the daughter is out about $10,000 in tuition, and the 529 distribution includes more than $15,000 in earnings?  

I wish I could help, but I convinced most of my clients to avoid 529 plans.  They were set up as loopholes for the wealthy to avoid estate taxes over multiple generations.  Seems to me, though, that only about $5,000 should be taxable.  And maybe less, if it was spent on other qualified expenses.