Trump, who is mulling a bid for the Republican presidential nomination, offered no proof for his claim but said he would continue to press the matter as he has the legitimacy of the president's birth certificate.
"I heard he was a terrible student. Not like okay, I heard he was a bad student. How does a bad student then go to Columbia and then go to Harvard? How does this happen? He's a bad student, gets in to Columbia, top, top school. Gets into Harvard, top, top, top school." he said.
Obama graduated from Columbia University in New York in 1983 with a degree in political science after transferring from Occidental College in California.
He went on to Harvard Law School, where he graduated magna cum laude 1991 and was the first black president of the Harvard Law Review.
Obama's 2008 campaign did not release his college transcripts, and in his best-selling memoir, "Dreams From My Father," Obama indicated he hadn't always been an academic star.
Trump told the AP that Obama's refusal to release his college grades were part of a pattern of concealing information about himself.
The internationally known businessman also said that the US president acted like an "idiot" for the way he handled the Libya crisis.
"I'll never forget, Obama said 'Oh the Arab League is in favour." He's all happy like an idiot. The Arab league is jumping up and down, the Arab league is in favour of us taking out (Libyan leader Moammar) Gadhafi and going into another war, a third war now," said Trump.
Trump then said if he was in charge he would have only assisted the coalition forces in Libya if Washington would have received oil in return for their military support.
"When you win a war, its like, to the victor, belongs the spoils," he added.
Trump, a wealthy businessman and reality TV host who has never run for office before, has risen to the top of many polls in part by his outspoken call for Obama to release his long form birth certificate.
The state of Hawaii has released a certificate of birth indicating Obama was born there on August 4, 1961, but that has not quelled critics who believe Obama was born outside the United States and is therefore not qualified to be president.
The controversy over Obama's place of birth has dominated the early stage of the 2012 Republican Party nominating contest, with Trump leading the charge.
"Why doesn't he show the birth certificate? And why is he spending millions of dollars in legal fees to get away from this issue? And let me tell you, he doesn't like Donald Trump and last guy in the world he wants to run against is Donald Trump," said Trump.
Katie Hogan, a spokeswoman for Obama's re-election campaign, declined to comment on the allegations.
Trump is scheduled to travel to the early primary states of New Hampshire and Nevada this week and said he will make a final decision about a presidential bid by June.
During the interview, Trump, who runs a private company, was asked about his own personal fortune and like so many times in the past he was reluctant to put an exact monetary figure on his wealth.
"Estimates of seven billion (Trump's net worth) I've had 2.7. I've had much less, I've much more. There all over, the truth is nobody knows but me and my accountant, cause I'm a private company. But I think people will be very, very impressed when they find out the net worth."
Trump has shaped himself as an ultraconservative candidate, reversing some positions he once held.
He now would make abortion illegal, opposes gay marriage and gun control.
But he has received the most political traction by latching onto the "birther" movement: those who believe claims initiated by the far-right that Obama was born outside the United States - despite the release of official birth records in Hawaii and other evidence.
The US Constitution requires that presidential candidates be "natural-born" US citizens.
Of late, Trump has appeared in interviews on all the major American cable television networks, pushing relentlessly his message that Obama needs to prove he was born in the United States.
He points to his rising poll numbers as proof that Americans like what he is saying on that deeply divisive issue.
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