This morning, following up on his message about higher education from his State of the Union address earlier this week, Barack Obama spoke on college affordability at the University of Michigan.

Obama, who’s been talking about the need to improve college affordability for several months, today unveiled his plan. According to an article by David Jesse and Kathleen Gray in the Detroit Free Press:

If the nation’s universities want to see federal dollars continue to flow to them, they need to a better job of holding down tuition, President Barack Obama told a crowd of more than 3,000 at the University of Michigan this morning.

His plan boils down to this: students who attend colleges and universities that slow down what Obama called skyrocketing tuition costs will get more federal student aid. If students attend schools that don’t keep costs down, they won’t get as much aid.

Under the president’s proposed plan institutions’ eligibility for federal student aid—Perkins loans, work-study money, and Pell grants—would be tied to their success in keeping costs down. Essentially, fewer, or lower, tuition hikes means more federal money. Institutions that continue, like the University of Michigan in recent years, to raise tuition at 8 percent a year will earn less federal money.

Here’s the president’s speech.

This is potentially a promising approach and represents the first time the federal government has made a serious effort to address skyrocketing tuition. The success of this, however, depends on how institutions address the challenge. Part of the reason public universities have been raising tuition so enthusiastically is that state legislatures have been providing them with less operation money. One way to address the president’s policy is to cut administrative staff and try and persuade legislatures to increase their generosity.

The other option, however, is to just accept the reduced federal money and enroll richer students.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer