College education is quite an engrossing task that calls for proper funding as well. Student loans can prove to be a good, viable option to cater for your education requirements. However, when it’s time to pay the money back to the lender, students get a bit of a shock. Some get entangled in a long dreary debt clearing process. But, you can avoid such situations by opting for student loan consolidation.

Loan consolidation enables you to roll your different loans into one. This helps you easily manage your loans, and you pay low, affordable monthly payments. However, there are a few important things that need careful consideration before you zero in on a student loan consolidation agreement.

Here are the five most important points that should consider before getting a student loan consolidation.

1. Deciding Right

Don’t rush into getting a student loan consolidation. There is no point taking a wrong decision in a hurry. First of all, you should think whether or not you actually need a student loan consolidation. Will you be able to keep paying the monthly installments for a longer duration of time? Just ponder over these questions before saying “yes” to a student loan consolidation scheme.

2. How much the consolidated loan costs you?

It’ really imperative for you to calculate the amount of money you will be paying back for your student loan consolidation. Many loan companies will have you pay lower monthly repayments, by spreading the loan agreement over a much longer length of time. This means that you will be paying a lot more than what you actually borrowed. So, unless you are really struggling with the repayments, student loan consolidation may not be the best option for you.

3. Rate of interest

You should keep close tabs on the rate of interest that your lender is charging. Different student loans may have a different rate of interest. But, usually student loan consolidation comes with a rather low rate of interest. However, don’t get misled by the low monthly payments. A low monthly payment does not necessarily mean that the rate of interest will also be low.

Furthermore, you should consider having your current rate of interest locked. If the finance companies that hold your student loans are willing to do this, loan consolidation may not be the right option for you. If the rate is frozen, you will be protected against interest rate hikes in the future.

4. Go for Grace period

Try getting your student loan consolidation during the grace period. Many student loans offer this facility wherein you don’t start paying the money back until 5-6 months after you graduate. Securing your loan during the so-called grace period may give you a lower rate of interest.

5. Check the Terms & Conditions

Don’t make a mistake of going by what you have been told. Get everything documented. There should be written agreements, and no verbal ones. You must ensure that all the terms and conditions as well as the warranties promised to you are clearly stated in the written deal. You must carefully read all the points.

And keep an eye on the hidden costs as well. Many student loan consolidations will have a hidden arrangement fee. This will likely be factored into the cost of your loan, which makes you pay more money in the long run.