Honestly? I went to a smaller state school in your state, and got full ride on a LEADERSHIP scholarship. They only marginally looked at my grades, more at my community involvement. I sat in on several "identical" classes at UofM and State, and BOY, was I getting a better education!!!! I would very emphatically suggest that she look at the smaller state colleges, even if it's only for the first two years, or yes, even at the community college in your area for the pre-recs for the major she plans to delcare. She will get EASILY as good an education, and she can still GRADUATE from the larger school later on (and pay two or three times the credit hours while she does it, all for the name). And quite honestly...if she has a history of substance abuse in the family, I would also strongly STRONGLY suggest that she stay home the first two years, just to gain that little bit of maturity that comes with the extra years under her belt. Both State and UofM have huge party scenes. I was not a drinker, was always the DD for my friends, but honestly saw things that would have curled my mother's toes...because we have STRONG levels of substance abuse in our family. That's just a personal aside and I know it wasn't asked for, so forgive me if I've overstepped.
What I would do is this: sit down and figure out how much total you can afford to give her a year. Do the homework and figure out how much two years would cost at the community college, how much it would cost at a smaller university, and how much it would cost at the large university. Then show her how much you can help, the interest on school loans, and how much she'd be paying a month if she went to each school. Sometimes the stark reality of it all does a lot to help her decide where to go. I would also look at the cost of books for the classes she wants to take the first few years at the big university and the community college...It isn't "fun" to say you're going to the smaller less "prestigious" school...but it sure is a heck of a lot easier on the other end of the four or five years of school!!
I had really great grades in college, and almost transferred to UofM half way through, with a scholarship...but then realized that my education was actually better (real professors teaching ALL the classes, even the large ones) where I WAS.