The deduction for higher education tuition expense is not phased out. Rather, if your modified Adjusted Gross Income is $1 over the $65,000/$131,000 limit, or $1 over the $80,000/$160,000 limit, that dollar of income has cost you a $2,000 deduction worth $560 in a 28 percent tax bracket.
The parents reduced their income $2,000 by not losing the higher education deduction. Since the parents income was assessed at 47% the income reduction may increase the childs financial aid eligibility by $940 ($2,000 x 47%).
If you are in a financial aid income assessment rate of 47%, you could increase your financial aid eligibility up to $470 for every $1,000 of income reduction by not losing the higher education deduction.