Balance of Power

Meanwhile, in a bit of bureaucratic double-teaming, the Education Department will lean on colleges to increase financial aid for the unemployed by, for example, making them eligible for Pell Grants, which could be used to pay for education or job training.

"The idea here is to fundamentally change our approach to unemployment in this country, so that it's no longer just a time to look for a new job, but is also a time to prepare yourself for a better job," Obama said. "That's what our unemployment system should be -- not just a safety net, but a stepping stone to a new future."

Obama has been pressing to make Pell Grant funding mandatory, instead of subject to the whims of the annual congressional appropriations process. But some high-level Democratic lawmakers like House Appropriations Chairman David R. Obey, D-Wisc., have been reluctant to cede programs under their jurisdiction and convert them into entitlements.

The new plan could, in theory, make the loans more essential to an economic recovery and build a bigger constituency for Obama's proposal. At the very least, it helps him fulfill a campaign promise to expand the reach of the grants and to index the amount of each award for inflation. Obama's fiscal 2010 budget plan proposed linking the grants to the Consumer Price Index plus 1 percentage point and increasing the maximum grant to $5,550 for the 2010-2011 academic year. The size of the maximum grant will already increase $500 in July, to $5,350.