Because a 529 isn’t a qualified higher education expense or other reason? This article explains it in plain language pretty well ... but the bonds were in the grandparent's name and willed to the grandkids and not the parents ... doubt you can change that now. https://www.savingforcollege.com/article/how-to-rollover-us-savings-bonds-into-a-529-plan
Also, do the kids claim the interest or us as parents? The person who cashed in the bonds pays the taxes on interest ... so it that is the kids then it goes on their return ... if the kids are minor dependents then it may be reported on the parent's return instead (not usually the better choice ... compute it both ways first).
