I am at a point where I can start repaying my parents for college. Is there any financially beneficial/smart way I can/should go about doing this? Or is using taxed income and mailing a check to them the best and only option?
I know of no tax shelter that will allow you to repay money to your parents for the cost of raising you. They may have already deducted the cost of your education from their taxes. If they were unable to then the same restrictions that prevented them would prevent you from taking the deduction. If they were eligible for deductions and failed to take them it is possible that they could file an amended return for the years they were eligible. As they probably claimed you as a dependent you would most likely be precluded from claiming the deduction yourself. But you may want to consult a tax professional to be sure.
Your desire to repay the debt you feel to your parents for the cost of your education may be admirable, for tax purposes any payment in service of this perceived debt will be probably be considered a gift, and have the tax consequences of that status. I would talk over your repayment plans with your parents and come up with something that works for all of you. You may want to consider contributions to a retirement account which may lessen the tax implications, but still consult a professional to avoid nasty surprises from the IRS.
Was this a loan? If so, there should be an agreed interest rate, written agreement, and payoff schedule. If you itemize, you can include this interest, and your parents should claim it as income to them.
Edit - as I see the clarifications come through, I'm updating my answer. You can gift each parent $13,000 per year. That's it, you walk a dangerous path when you start to try to game the system.
As far as I can tell there's no way to deduct this repayment legally. If you use gifts, you pay income tax (and gift tax on the excess of $13k per person per year). If you use the high-interest pretend loan it might be tax evasion, and they legally have to pay income tax on the interest anyway. You could give them a year-long sinecure for the amount but, again, they pay tax on that income.
I think your best shot is to drop it into your own retirement accounts at a tax advantage, and ask them to deduct that value from your inheritance. They may have planned to do that anyway!