I think you are mistaken about how you can avoid paying taxes on interest on EE savings bonds.
In order to avoid paying, you have to fill out IRS Form 8815
From General Instructions page 3 of Form 8815:
Who Can Take the Exclusion
You can take the exclusion if all four of the following apply.
- You cashed qualified U.S. savings bonds in 2021 that were issued
- You paid qualified higher education expenses in 2021 for yourself,
your spouse, or your dependents.
- Your filing status is any status except married filing separately.
- Your modified adjusted gross income (AGI) is less than: $98,200 if
single, head of household, or qualifying widow(er); $154,800 if married
filing jointly. See the instructions for line 9 to figure your modified AGI.
U.S. Savings Bonds That Qualify for Exclusion
To qualify for the exclusion, the bonds must be series EE or I U.S.
savings bonds issued after 1989 in your name, or, if you are married,
they may be issued in your name and your spouse’s name. Also, you
must have been age 24 or older before the bonds were issued. A bond
bought by a parent and issued in the name of his or her child under age 24 does not qualify for the exclusion by the parent or child.
So there are possible sticking points:
The first one is that the amount needs to be for the paid qualified higher education expenses amount. While normally this refers to tuition, as noted in the comments Qualified Tuition Plan (QTP) should be eligible, checking IRS Publication 970 (2021), Tax Benefits for Education
section on Education Savings Bond Program
Qualified education expenses. These include the following items you pay for either yourself, your spouse, or a dependent.
- Tuition and fees required to enroll at or attend an eligible educational institution. Qualified education expenses don't include expenses for room and board or for courses involving sports, games, or hobbies that aren't part of a degree or certificate-granting program.
- Contributions to a qualified tuition program (QTP) (see How Much Can You Contribute in chapter 7).
- Contributions to a Coverdell education savings account (ESA) (see Contributions in chapter 6).
As 529s are QTPs, so this should be okay.
The second one is that the wording of the 1989 exclusion to me seems to be for bonds issued in the parent's name for the benefit of future children. As the bond is in your name, issued when you were 8, and a gift from your grandmother, I don't believe it would qualify.
Of course, depending on your state of residence there may be tax advantages to contributing to a 529 in your son's name.