(U-WIRE) WASHINGTON – In the $2.57 billion budget he unveiled before Congress last week, President Bush called for an overhaul of financial aid in higher education and a major reorganization of aid aimed at helping disadvantaged students.

While the overall education budget would be cut by about one percent, the first reduction in 10 years, the president’s proposal would increase overall aid to poor districts by 4.7 percent, to $13.3 billion.

Bush called for a $1.3 billion addition to the Pell Grant program, a 45 percent increase. Under the plan, Pell awards would benefit more low-income students and the maximum award would grow $500 to $4,550 over five years.

Funding for the Pell awards would come from cuts in subsidies to lenders and an elimination of federal dollars going to the Perkins loan program.

Secretary of Education Margaret Spellings praised the budget in an address to the American Council on Higher Education Monday.

“This is truly a reform budget when it comes to student loans,” she said.

Bush’s plan would maintain a “variable” interest rate formula on student loans, which the Department of Education said would reduce the amount of interest students would have to repay with loans. Annual subsidized loan limits would rise to $3,500 for first-year students and $4,500 for second-year students.

But the president provoked controversy from both parties in Congress by asking for $529.6 million in cuts to federal education spending.

His plan would end all federal spending on vocational education, $1.2 billion, and eliminate a slew of high school programs aimed at helping low-income students such as Upward Bound, Talent Search and GEAR UP. Some of the freed funds would be directed toward a new effort to implement No Child Left Behind reforms such as remedial reading classes and mandatory federal testing at the high school level.

Republican Sen. Arlen Specter, Chair of the Senate Subcommittee on Labor, Health and Human Services and Education, was skeptical of the president’s proposals.

“Funding for Pell Grants, which has received considerable public attention, is only one of many worthy education programs deserving continued support,” Specter said in the Washington Post. “The president’s support for increased money for Pell Grants is commendable, but there is no net gain to education if those increases come from cutting or eliminating other important programs.”

The ranking Democrat on the Senate education subcommittee, Tom Harkin of Iowa, asked Congress to reject the education budget.

“The president eliminates $2.1 billion for high schools, replaces it with $1.5 billion, and calls it an ‘initiative.’ That is exactly the kind of help our schools can do without,” Harkin said in a statement.

Harkin also cited a $12 billion shortfall in funding originally planned to implement No Child Left Behind when the law was enacted in 2002.

Along with other Democratic lawmakers, Harkin applauded the boost to the Pell Grant program but criticized the president for not meeting a campaign promise made in 2000 to increase the maximum award to $5,100. Bush’s focus on high schools would come in the form of $2 billion aimed at helping struggling students, math and science partnerships and Advanced Placement tests. He would require state math and reading testing in grades nine to 11, an expansion of two years.

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