Mary Lou took a $7,000 distribution from her educational savings account and used $6,500 to pay for qualified higher education expenses. On the date of the distribution, her educational savings account had a $28,000 balance including the $21,000 she had contributed. How much of the $7,000 distribution is tax free?
a. $1,750
b. $7,000
c. $6,875
d. $-0-
e. $6,500