The plan drew predictable reviews from Democratic and Republican leaders.

Rep. George Miller, D-Calif., chairman of the House Education and Labor Committee, said the plan will put added pressure on the Senate to approve legislation re-directing private-sector loan subsidies to student aid programs. “This should send a clear message to the Senate: Join the House in voting to send over $80 billion in federal taxpayer subsidies to children and students, instead of the banks,” he said.

But Rep. Ron Kline, R-Pa., senior Republican on the House education panel, took a dimmer view. “While I welcome responsible investments in programs that improve educational opportunity, this administration has demonstrated a troubling affinity for new federal mandates and intrusions in exchange for new education dollars.”

Some of the budget’s most far-reaching changes are in K-12 education, where the administration wants to shift more funding from guaranteed formula funding to competitive grants. Among other provisions, it would make permanent the Race to the Top program contained in last year’s economic stimulus bill. The program funds states for innovations designed to increase student achievement and high school graduation rates.

“We have to educate our way to a better economy,” Duncan said. “Race to the Top taught us that competition and incentives drive reform.”

The administration also would consolidate 38 K-12 programs into 11 initiatives in an effort to promote effectiveness. In one of the broadest consolidations, the department would take 15 existing programs on effective teaching and consolidate them into three with a focus on literacy and science, technology, engineering, and mathematics (STEM) projects.

One new program is a $210 million Promise Neighborhoods initiative, a competitive grant program modeled on the Harlem Children's Zone. The initiative emphasizes neighborhood transformation by combining school improvement with comprehensive social services.