Of particular note is President Barack Obama¡¯s decision to stick to his pledge to increase the level of support for Pell Grants for poorer students, and tie increases to the rate of inflation.

However, the move has forced some sacrifices within the Budget proposals: interest subsidies on loans to graduate and professional students while they are taking their courses have been eliminated and year-round Pell Grants have also ended.

The biggest investment is in federal direct student loans, which are forecast to nearly double from 2010-2012 from $74.7 billion to $145.1 billion.

The rise comes after the abolition in March 2010 of the Federal Family Education Loan Program, which gave federal subsidies to encourage private student lenders.

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Molly Corbett Broad, president of the American Council on Education, said: ¡°It is clear the Administration has put a lot of effort and care into producing a Budget that strives to protect and preserve student financial aid.

¡°While the higher education community does not agree with all the choices made, we support the overall objective of ensuring a viable array of student aid programs anchored by the indispensable Pell Grant program.¡±

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She added: ¡°The restoration of economic prosperity in a globally competitive economy relies upon a well-educated workforce.

¡°Without robust and diverse student aid programs, many students will be denied the opportunity to participate in post-secondary education and the United States will lose the opportunity to make the most of its human capital.¡±

The news of increased federal funding for higher education will be a temporary victory for most public institutions, which are expected to face further cuts to their public funding from the state governments.

sarah.cunnane@tsleducation.com