Obama warns colleges

“We are putting colleges on notice” about tuition increases, President Barack Obama told a cheering crowd of students Friday at the University of Michigan.

ANN ARBOR, Mich. -- President Barack Obama fired a warning at the nation's colleges and universities Friday, threatening to strip their federal aid if they "jack up tuition" every year and to give the money instead to schools showing restraint and value.

Obama can't proceed without approval from Congress, where the reaction of Republican lawmakers ranged from muted to skeptical. Higher-education leaders worried about the details and the threat of government overreach, and one dismissed it as mere election-year "political theater."

Average tuition and fees at public colleges rose 8.3 percent this year and, with room and board, now exceed $17,000 a year, according to the College Board.

Obama delivered his proposal with campaign flair, mounting a mainstream appeal to young voters and struggling families.

He said higher education has become an imperative for success in America, but the cost has grown unrealistic for too many families, and the debt burden unbearable.

"We are putting colleges on notice," Obama told an arena packed with cheering students at the University of Michigan.

"You can't assume that you'll just jack up tuition every single year. If you can't stop tuition from going up, then the funding you get from taxpayers each year will go down."

Obama is targeting only a small part of the financial aid picture -- the $3 billion known as campus-based aid that flows through college administrators to students.

He is proposing to increase that amount to $10 billion and change how it is distributed to reward schools that hold down costs and ensure that more poor students complete their education.

The bulk of the more than $140 billion in federal grants and loans goes directly to students and would not be affected.