By Caren Bohan
ANN ARBOR, Michigan (Reuters) - President Barack Obama, appearing before thousands of cheering students at the University of Michigan, touted his plan on Friday to reward colleges that keep their tuition under control with more federal aid as he makes school affordability a top election-year priority.
Obama, seeking to reform federal aid for students to pay spiraling college costs, unveiled fresh details of a proposal to make higher education affordable for more families that he first announced on Tuesday in his State of the Union address.
His plan is aimed at helping students pay for a higher education, which is seen as crucial for employment as the country is grappling with an 8.5 percent jobless rate. It also specifically targets the issue of income and access, a central focus of the November 6 presidential race that has zeroed in on the nation's widening wealth gap.
Obama's plan would have his administration redistribute campus-based aid, which is handled directly by schools, based on schools' performance: colleges that keep tuition costs in check and get students to graduate would get more money than other schools that do not.
"We're putting colleges on notice: 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," the Democratic president said at the speech that had all the trappings of a campaign event with striped bunting and a crowd-filled stage.
Obama couched his remarks in the broad populist themes of his re-election campaign - of sticking up for the middle class, rewarding companies for bringing jobs back home, and ensuring that the rich pay higher taxes.
"We should push colleges to do better. We should hold them accountable if they don't," he told a crowd of about 4,000 people.
Low-interest federal Perkins loans for poor students will also be expanded to $10 billion a year, the White House said in a statement. Another $1 billion grant will go to states that reform their higher education systems, it added.
Obama also called for a "college scorecard" that would give prospective students and families a uniform, easy-to-read look at information such as tuition and graduation rates across all universities -- just as labels on food packages offer a standard look at essential facts.
Other proposed changes would require congressional action, something many analysts and others see as unlikely in an election year.
Obama wants lawmakers to increase the number of work-study jobs over the next five years. He also has called on Congress to block an increase in interest rates on federal student loans set to take effect July 1, doubling from 3.4 percent to 6.8 percent for about 7.4 million students with Stafford loans, low-interest loans directly from the Department of Education.
(Writing By Susan Heavey; additional reporting by Alister Bull in Washington; Editing by Will Dunham and Vicki Allen)