how to report 529 distribution used for student loan payment

Q. How to report 529 distribution used for student loan payment?

A. You don't report it, since it was a "qualified distribution".

You can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including student loan payments of $10K or less,  to cover the distribution. When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records. You would still have to do the math to see if there were enough expenses left over for you to claim the tuition credit. You also cannot count expenses that were paid by tax free scholarships. You cannot double dip! 

References:

1. On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution." 
2. IRS Pub 970 states: “Generally, distributions are tax free if they aren't more than the beneficiary's AQEE for the year. Don't report tax-free distributions (including qualifying rollovers) on your tax return”.

If you still want to enter it, to get the worksheet, reply back for instructions. How you enter it depends on whether the student is you dependent or not.  In simple terms. the interview will eventually present a screen "did you use the distribution to pay student loans" (or some such wording).