With a nation at war and in the midst of severe economic doldrums, President Obama asserted in his first State of the Union address Wednesday evening that he has never been more hopeful about America’s future.

America’s future lies with students today, he said. Some of them gathered to watch him speak at David’s Place, 100 S. Linn St.

“In the 21st century, the best antipoverty program around is a world-class education,” the president said. A group of roughly 30 listened as the message emanated from multiple screens.

Obama urged the Senate to pass the American Graduation Initiative, a bill that will invest $10 billion in higher education in the next decade, revitalize community colleges, and encourage college completion.

By rewarding success and investing in reform, Obama said he hopes to inspire students to excel.

Obama said his administration plans to end taxpayer subsidies that go to banks for students loans. Instead, he said he will increase funding for Pell Grants and give families a tax credit to help them pay for four years of college.

After graduation, American college students would only be required to spend 10 percent of their annual income on students loans, with forgiveness after 20 years. Those working in public service would see the rest of their loans forgiven in just a decade.

UI student Melissa Palma said she was concerned when Obama didn’t include education as an exemption to his proposed three-year freeze on government spending.

“Previously, he was talking about a commitment to innovation, and then a few minutes later didn’t include that in the list,” she said.

With the spending freeze, Obama said he is hoping to remain frugal within budgetary constraints.

Meanwhile, Obama pushed his agenda for creating jobs. He proposed using $30 billion worth of bailout money repaid by banks to finance small businesses.

While he said creating new jobs won’t make up for the 7 million that have been lost over the past two years, Obama stressed the importance of developing a foundation for long-term economic growth.

The president also noted he intends to bring American troops in Iraq home by August and repeal the Don’t Ask, Don’t Tell policy, allowing gays to openly serve in the military.

Obama also said he hopes to increase public trust in the government, in part by increasing transparency.

“He said he would provide more transparency and apologized for not explaining his actions as well as he could have last year, which I found kind of heartening actually,” UI student Atish Dey said.