An exerpt from www.savingsbonds.gov:
CLAIMING THE EDUCATION TAX EXCLUSION
5.1) What are the redemption procedures for holders of qualified bonds?
There are no changes in the redemption procedures for paying agents. It's the bond owner's responsibility to maintain a record of bond redemption transactions to support claims for exclusion from gross income in the year that qualified bonds are redeemed and qualifying educational expenses are incurred.
However, if an owner redeeming Series EE and/or I Bonds issued after 1989 states his or her intention to exclude interest from gross income in accordance with the education exclusion, and is at the same time redeeming Series EE bonds issued prior to January 1, 1990, the paying agent should provide separate redemption values and accrued interest subtotals for bonds issued prior to January 1, 1990, and for those issued on or after January 1, 1990. If the bond owner hasn't made a record of the serial numbers, face amounts, and issue dates, the agent should advise the customer to do so before redeeming the bonds. An optional IRS Form 8818 provides instructions and space to record this information.
5.2) How does one exclude the interest income on the tax form?
IRS Form 8815 includes the necessary worksheet and instructions to taxpayers for use in connection with tax returns.
5.3) Will the educational institution be required to verify the educational expenses of the taxpayer, taxpayer's spouse, or the taxpayer's dependent?
Generally no. However, the taxpayer should retain receipts or canceled checks for educational expenses as part of the taxpayer's record to substantiate his or her claim to an exclusion from income of the bonds cashed.
For detailed information about the rules as well as information on the income eligibility, check
IRS Publication 550, Investment Income and Expenses;
Form 8815, Exclusion of Interest From Series EE U.S. Savings Bonds Issued After 1989; and IRS Form 8818, Optional Form to Record Redemption of College Savings Bonds.
For current recorded rate information, call 1-800-4US-BOND (1-800-487-2663).