Do I have to report student financial aid as income?

What is the name of your state?
California

I'm claiming my daughter, a student, as a dependent. Do I have to report any financial aid(grants) she received from her school as income on my return?

Or does she have to on her return (worked part time)?

For degree-seeking students, any amount of a scholarship (including athletic scholarships), fellowship, or grant which exceeds expenses for the following:
- tuition
- mandatory fees
- books, and
- required supplies or equipment
is considered taxable income and is subject to federal tax.

This is covered in IRS Publicaiton 520, which can be found at:
http://www.irs.gov/pub/irs-pdf/p520.pdf

The excess scholarship income goes on line 7 of her return. You have to reduce the "eligible tuition & fees" for any education credits by the amount of grants/scholarships.