During its first years, federal tax dollars would cover 90 percent of the costs and states would pick up the balance for these preschool programs, said Carmel Martin, the Education Department's policy chief. However, the federal share would shrink to 25 percent in coming years and states would be left to pick up 75 percent of the costs.

The budget also sets aside $11.8 billion to help local districts keep teachers on staff while the economy returns to pre-recession levels.

Obama's budget also would move student loan interest rates away from Congress' control and peg them to market rates. That shift is a nod to concerns that student borrowing is set in a vacuum by politicians and not by the economy. Interest rates on new Stafford student loans were set to double, from 3.4 percent to 6.8 percent, on July 1. Consumer advocates worried that could cost students who take new student loans at the maximum levels some $5,000 over the life of the loan. Obama's budget would let new borrowers dodge that rate hike for now, but could open students to higher rates if the markets change in the future.

Obama's budget also includes $1 billion in funds for a college affordability initiative, which would give money to states in exchange for keeping costs down and investing in improving results, similar to the Race to the Top competition the department used to spur innovation in primary and secondary education.

The maximum Pell Grant amount would increase to $5,645 for each student each year and some 112,000 new students would be added to federal work study programs.

While the budget only asks Congress for the $56.7 billion, the Education Department stands to spend closer to $71.2 billion. That difference â¿¿ $14.5 billion â¿¿ is the amount the agency collects from student loan interest, fees and other sources, letting the Education Department ask for less than it spends.

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