RALEIGH - U.S. Secretary of Education Margaret Spellings said Thursday that President Bush intends to push for significant increases in the maximum federal Pell Grants available to students.

Bush's proposed budget to be released Monday would raise the grant by $550 next year to a maximum $4,600. Over a five-year period, the grant would grow by $800 to $5,400. It would be the largest increase in more than three decades.

"One of the most critical issues in American higher education is the lack of affordability for poor families," Spellings said Thursday during the annual Emerging Issues Forum at N.C. State University. "It is a raging fire in American higher education. Obviously affordability is something that all families struggle with, but it's now become virtually out of reach for so many families."

The proposal is in stark contrast to the $12.7 billion in education cuts approved by a Republican-controlled Congress in 2005 -- cuts on which Spellings was largely silent. Spellings, who spoke with reporters after her speech, would not elaborate on how much the new proposal would cost or offer details on where the money would come from.

The Pell Grant is the primary federal financial aid program aimed at poor students. The Democratic-led House this week approved a $260 boost in the Pell Grant, to $4,310. A Democratic proposal in the Senate, which is before a committee, calls for an immediate increase to $5,100.

A leading Democratic senator said the proposal was long overdue.

"This welcome development shows how a Democratic Congress is changing the nation's priorities," Sen. Edward Kennedy, D-Mass., said in a release issued after the announcement.

In Raleigh, Spellings' comments were greeted with applause by those at the forum.

"It's fabulous," said UNC President Erskine Bowles. "It's exactly what we need."

Spellings praised Bowles for proposing accountability measures for UNC campuses, including higher graduation rates and the possibility of standardized student testing to measure academic progress in college. A commission created by Spellings recommended a host of changes last year to deal with major problems of affordability, accessibility and accountability in American higher education.

One major recommendation -- a significant increase in the Pell Grant -- was pushed by former N.C. Gov. Jim Hunt, who served on the Spellings Commission.

Spellings said 90 percent of the country's fastest-growing jobs require a college degree, but only 40 percent of Americans have those degrees.

"Other nations educate more of their young adults to more advanced levels than we do," she said. "At a time when Americans need a degree, we're stagnating, and it has worrisome implications for our country, for our people, and for innovation in this country."

But increasing college costs threaten progress, she said.

In the past 25 years, tuition increases have outpaced inflation, family income and even the cost of health care, she said. Four-year college tuition has jumped 35 percent in the past five years.

"The reality is that as costs skyrocket, it becomes increasingly difficult for middle-class families to afford college and for low income, mostly minority students, college is becoming virtually unattainable."

In recent years, growth in federal financial aid has been concentrated on loans, which tend to help middle-class students. The buying power of the Pell Grant has deteriorated. With Congress and Bush both advocating an increase in need-based grants, students were cautiously optimistic Thursday.

"We are always grateful for an increase," said Derek Pantiel, a senior at N.C. Central University. "At the same time, $4,600 is still not enough."