"The bottom line is this: We've got a crisis in terms of college affordability and student debt," the president told a basketball arena packed with a raucous crowd Thursday at the University at Buffalo, part of the State University of New York system.
"There aren't many things that are more important to that idea of economic mobility, the idea that you can make it if you try, than a good education," he said. "All the students here know that; that's why you're here."
Obama's three-pronged approach would include the college ratings system "so students and taxpayers get a bigger bang for their buck," jump-starting innovative competition among colleges to encourage student success "without jeopardizing quality," and helping students who must take on debt find "ways to manage and afford it."
Students would have to do their part as well, the president said as he began a two-day campus bus tour in New York and Pennsylvania.
Some of his proposals will require congressional action, while others can be achieved administratively, Obama said, and some aspects of his plan "won't be popular" among various stake-holders.
"[But] I have confidence that our country's colleges and universities will step up ... and lead the way to do the right thing for students," he said.
Students receiving federal subsidies and grants must complete their semester's coursework before receiving federal financial aid for the next semester, he said.
"We'll make sure we're building in flexibility," he said, "But the bottom line is, we need to make sure that if you're getting financial aid, you're doing your part to make progress toward the degree."
Obama told the audience he tasked Education Secretary Arne Duncan with developing the rating system criteria to be in place by the 2015 college year.
"I think we should rate colleges based on opportunity" of helping students from all backgrounds succeed, he said, and include metrics such as how much debt students have when they graduate, graduation rates and their entry into the workforce.
The answers should help students and parents "determine how much value [colleges] really offer."
The ratings also will determine how much money the federal government allocates to colleges and universities, Obama said, adding that states will be encouraged to follow the federal government's lead.
He said he hoped to expand the "Pay as You Earn" plan that allows students to apply only 10 percent of their income toward their college debt.
The program has two obstacles, he said. One is that too many current and former students aren't eligible and the other is the lack of knowledge about the program.
"We need congress to open up the program to more students," he said.
The administration will launch an educational effort on the program.
"If we move forward on these three fronts," he said, "I guarantee you, we will help more students afford college. We'll help more students graduate from college. We'll help more students get rid of that debt so they can get a good start in their careers."
Obama gave essentially the same speech later at Henninger High School in Syracuse, N.Y. But the president also got in a couple of digs at his Republican opposition in Congress.
"The idea used to be that here in America anybody could make it. But part of that was because we put these ladders of opportunity for people," Obama said.
"Unfortunately, you may have noticed that in Washington, rather than focusing on a growing economy and creating good, middle-class jobs, there's a certain faction of my good friends in the other party who've been talking about not paying the bills that they've already run up; who've been talking about shutting down the government if they can't take away health care that we're putting in place for millions of Americans.
"Those are not ideas that will grow our economy. They're not going to create good jobs. They're not going to strengthen the middle class -- they'll weaken the middle class. So we can't afford the usual Washington circus of distractions and political posturing. We don't need that. What we've got to do is to build on the cornerstones of what it means to be middle class in America -- a good job, good wages, a good education, a home, affordable health care, a secure retirement."