(Eds: Edits last sentence to reflect changes haven't been finalized.)

CANDICE CHOI AP Personal Finance Writer Published:

NEW YORK (AP) -- The mad dash to cobble together college funding will soon be under way.

In the weeks ahead, colleges will begin mailing out their much-anticipated acceptance letters and financial aid packages. The notices will alleviate pent up anxiety and finally give high school seniors a clearer idea of what their futures will hold.

But amid all the emotions, students and families will also need to start sorting out how they'll pay for tuition. The average bill now comes in at more than $17,000 to attend an in-state public college.

The problem is that navigating the universe of financial aid can be confusing. That's because there's a vast patchwork of grants, scholarships and loans available. But a failure to properly compare the options and explore the alternatives could mean the difference in thousands of dollars in debt upon graduation.

Adding to that confusion is a spate of headlines in recent weeks regarding changes in financial aid. To help navigate this process, here's a look at what's behind the recent changes:

Comparing Costs

As part of his broad plans to make higher education more affordable, President Barack Obama recently said he wants to make it easier for families to size up the cost of college.





Interest Rates



The loans also come with different interest rates. Unsubsidized loans currently charge a fixed rate of 6.8 percent. The interest rate on subsidized loans was gradually lowered to its current fixed rate of 3.4 percent over the past few years. But the law that temporarily reduced the rate sunsets in July.

So unless Congress extends the reduction, the rate on unsubsidized loans will snap back to 6.8 percent.


Then there are private student loans, which come with entirely different terms. These are widely considered to be an option of last resort since the interest rates tend to be higher and variable, meaning they rise and fall with a benchmark rate. And since benchmark rates are at record lows, the rates of private lenders are likely to rise in the years ahead.

Hardship Clauses


The issue came to light last week when Sallie Mae, a private student lender, said it was changing how it handles a fee it charges unemployed borrowers who seek to suspend payments.



Obama is also pushing to have a change take effect this year that would cap monthly payments to 10 percent of income above $16,300. Borrowers would also be relieved of payments sooner, with any remaining debt forgiven after 20 years. That change had originally been scheduled to take effect in 2014.