President Barack Obama’s new budget for the 2010 fiscal year proposed Thursday called for the abolition of bank-based student loan programs and directed funding towards maximum Pell Grants.

According to Rep. Mark Pocan, D-Madison, the president allotted $46.7 billion for the educational portion of the budget, an increase of 12.8 percent from the 2009 fiscal budget.

Such an increase will allow for Pell Grants to increase with the inflation rate.

If passed, the need-based student loan known as the Perkins Loans will see a $5 billion increase which will allow for 2.7 million more students to be eligible to receive financial aid.

In an effort to achieve the president’s goal of having the world’s highest percentage of college graduates by the year 2020, the proposed budget also calls for a $2.5 billion grant program.

Although higher education officials are glad to see an increase in student aid, the budget plan has its critics.

“This money is not being spent in ways that will stimulate the economy long term,” said Mike Mikalsen, spokesperson for Rep. Steve Nass, R-Whitewater.

Mikalsen believes the budget request is nothing new, and Obama’s proposal mimics action taken by the government to subsidize student loans during a similar economic climate in the 1970s.

Such a budget plan will drive up private sector loan markets and make it increasingly difficult for middle to high income students who don’t qualify for the government run loan program to receive financial assistance, Mikalsen added.

“This is a serious threat to upper and middle class students who want to go to school,” Mikalsen said. “Now instead of getting student loans, parents of students who don’t qualify will have to take out a mortgage on their house. It’s going to have a devastating impact on the total number of students that go to school.”

Mikalsen also spoke against Obama’s decision to increase government spending on academic research predicting an increase in tuition as a result of this expenditure.

Mikalsen noted the budget lacks anything that would encourage private or public schools to control the cost of tuition

In contrast, Rep. Spencer Black, D-Madison, said Mikalsen was “exactly wrong” and Obama’s stimulus plan will succeed in making college much more affordable.

“President Obama is making a major priority of investing in our higher educational system by again trying to make the higher education the best in the world,” Black said. “We will again lead the world in academic research and innovation.”

Pocan agreed Obama’s budget for education was going to keep the maximum amount of students in school.

In doing so, an increase in college graduates will eventually contribute to the state’s work force and pull the state out of the economic decline, Pocan said.

The finalized budget will be voted upon in April.