[op00to]

> As such the University is selling a defective good to the parents

The university is selling a possibly "defective" good to the student. The parents are gifting money to the student to pay for that service.

[sulam]

Actually it's not a gift. If it was a gift, it would exceed the amount of money I can give him and would trigger taxes for him, and I'd need to give him _more_ money to pay those taxes.

I don't know how this works legally, but I do know (because I asked) that this isn't considered a gift according to the IRS.