The amounts involved can get complicated here, and it may make sense in some cases to hold onto these bonds - although sometimes holding onto them affects the next year’s financial aid - especially if it was need-based aid.
Usually the student should redeem everything in the student’s name, first, and use up those assets, on tuition and fees. Then, the 529 should be used to pay remaining tuition and fees., and if applicable, some of it towards room and board. Depending on how need based or merit/scholarship was given, the rest comes from parent’s assets, and unless there are restrictions, the parents should make every effort to claim the maximum tax credit - even if it means treating some of the student’s FA as taxable income, since the student is generally taxed at a much lower bracket than the parents.
Sadly, the schools don’t/can’t give tax advice, and this is confusing to most folks especially the first time through.
Think of it as the tax credit is worth more to the parents than to the child, and it will help you start to understand. Many parents pay for their child’s college expenses out of several buckets - and it makes sense to try to understand them before beginning to redeem them - that is advice number 1, because as pointed out above, the tax implications are different for each of them.
Advice number 2 is to keep detailed records on each expense. Not just the form 1098T you will get from the college which identifies the tuition expense, but also all the fees and books, computer purchases, etc.
Series EE bonds are not taxed if used for QEE’s - but that includes tuition and fees, not room and board. But if you are allowed to juggle the scholarship/financial aid and have that apply toward the R&B, then the amount the parent has paid is attributed to QEE’s - and there may still be an amount that the parent paid after the EE bonds and 529 that will allow the parent to claim the full AOTC.
If OP wants to provide a few rough numbers, I am sure folks would offer advice as to which buckets should pay for what expenses (tuition, fees, books/computer, R&B, etc.) to minimize the tax implications and best set you up for next year’s financial aid.
In some situations, it makes sense to pay Fall 2016 and Spring 2017 all before 12/31/16 - and in others, it may make more sense to wait until after 12/31/16 to make the Spring payment.