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Obama's budget to target education Pell grants

By Lesa Jansen, White House producer

WASHINGTON (CNN) -- President Obama's budget Monday will propose cutting $100 billion dollars from the Pell grant program and other higher education programs, but use those savings to ensure that eligible students would be able to receive the current maximum award of $5,500 per school year.

Jacob Lew, director of the Office of Management and Budget, said Sunday on State of the Union with Candy Crowley that the changes would affect two areas of the Pell grant program.

The proposal calls for the end to the policy where students could qualify for two grants in one year -- one for the regular academic year and a second for summer school. Only one Pell grant per year would be awarded.

According to an Obama administration source, the savings would be $8 billion dollars next year, and $60 billion dollars over 10 years.

Lew said the second change would affect graduate and professional school students, reducing loan subsidies for these students.

Currently the government pays the interest on loans for some graduate and professional school students as long as they remain in school. Under the proposal, interest would build up while students were in school, though students wouldn't have to start paying back loans until after graduation.

By ending this program, the government would save $2 billion next year and $29 billion dollars over 10 years, according to an administration source.

"In education, we invest very seriously to make sure that 9 million students can go to college using Pell grant, to make sure that K-12 education -- we have 100,000 new teachers who are trained and experienced in science, technology, engineering and math," Lew said on State of the Union. "But we also have cutbacks."

In a conference call Friday, Education Secretary Arne Duncan was asked about cuts in discretionary spending and how that could affect Pell grants. Duncan said the administration is "committed to maintain Pell."

Duncan said the budget would be "responsible" and "makes important investments in education reforms" including early learning, reforms in education and making college affordable.

When asked if more money for race to the top and new initiatives for early learning was realistic, he said he hoped it is. He continued: " The president is making very tough cuts, painful cuts. Pieces of our budget is being hit hard but we have to continue to invest" in education for this country's children. To top of page

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