Obama’s proposed budget is full of big victories for students.

As the New York Times reports, the budget would guarantee full funding of Pell Grants, and index the grants to inflation. It would raise the maximum grant by more than $600 for this year, and by another $200 in 2010.

And it would save $4 billion a year by eliminating the Federal Family Education Loan Program, which provides subsidies to banks that offer student loans at discounted rates. It would replace those subsidies with an expansion of the government’s direct lending program.

Carmen Berkeley, president of the United States Student Association, says the budget “answers the call for change millions of young people made in the 2008 election … and would change the face of financial aid in America.”

The budget was released as a 134-page outline on Thursday, and it will be delivered to Congress in its final form in April.