Interest on federal savings bonds is taxable; the portion of the redemption representing principal (your initial cost for the bond) is not.
If bonds (Series EE and I) are issued after 1989 and redeemed to pay qualified higher education costs for a taxpayer, spouse, or dependent (and some other conditions are met), some or all of the interest may be tax free, depending on the taxpayer’s overall income. Form 8815 has the details.
A credit allowed to taxpayers with earned income or adjusted gross income (AGI) below certain thresholds.