obama's policy on cutting subsidized loans?

I just read that obama is planning to cut the subsidies paid on loans, in order to add more money for pell grants. How come we give free money to poor people. I think that even poor people should have to take out loans to go to school just like I do. I think money should be offered to poor people, but giving it to them. I am a college student, and i work in the business office so i often see people getting paid to go to school that have a 2.0 gpa, While i have a 3.6 gpa and get nothing because my parents make to much money. I pay my way with the help of some small student loans, but i have never been given any money by the government. If the government just gives these poor students free money to attend what incentive do they have to succeed in school. Some will argue that their going to college to make themselves better, while this may be true, how come they can not pay back some student loans like i will have to one day do. It just doesn't seem fair that the gov,t will give free money to below average students. If there were some kind of standard set like maybe have a 3.0 requiremnet to get federal money then I wouldn't have as big of a problem with it, but why is the gov't wasting money on below average students. I would compare it to investing in a company that you know for a fact that tommorrow it is going under. Seems like a waste, can someone tell me if I am dead wrong and/or show a different arguement. I just think that everyone should either get free money or everyone should have to pay back debt they owe