In September 2013, Bill and Linda, a married couple with $50,000 gross income, cashed qualified Series EE U.S. Savings Bonds which they had purchased in 2008. The proceeds were used to help pay for their son's 2013 college tuition. They received gross proceeds of $3,500, representing principal of $3,000 and interest of $500. The qualified higher education expenses they paid in 2013 totaled $2,100. Their modified adjusted gross income for the year was $20,000. How much of the $500 interest can Bill and Linda exclude from gross income in 2013?