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I’m a Retired Teacher and I’d Like to Lower My Parent PLUS Loan Payments

Interest rate negotiation can result in a lower interest rate than you are paying now.
Written by Steve Rhode


Dear Steve,

I am a retired teacher. I was told that I could consolidate the parent plus loans I have and then get an income contingent repayment plan.

1. Does my credit need to be good to consolidate my loans
2. The article I read said a requirement is to be employed. Does that mean I can’t get the income contingent repayment plan since I’m retired.



Dear Tina,

This should be a simple, easy, and free process for you. What you would first need to do is consolidate your Parent PLUS loans into a new Direct Loan and then select the Income Contingent Repayment as your payment plan.

Under the Income Contingent Repayment (ICR) payment your payment would be either 20 percent of your discretionary income or what you would pay over 12 years.

The term discretionary income trips many people up. Here is how it is defined, “For Income-Based Repayment, Pay As You Earn, and loan rehabilitation, discretionary income is the difference between your income and 150 percent of the poverty guideline for your family size and state of residence.For Income-Contingent Repayment, discretionary income is the difference between your income and 100 percent of the poverty guideline for your family size and state of residence.The poverty guidelines are maintained by the U.S. Department of Health and Human Services and are available at .

You can use the online repayment estimator to get an idea what your new payment would be.

Here is how you can apply for a Direct Loan

You apply for a Direct Consolidation Loan through This process offers both electronic and paper options. You can complete the electronic application as explained below or you can download and print a paper application from for submission by U.S. mail.

Once you sign in to, you will be able to electronically complete the Federal Direct Consolidation Loan Application and Promissory Note. The electronic application on consists of the following five steps:

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1. Choose Loans & Servicer
2. Repayment Plan Selection
3. Terms & Conditions
4. Borrower & Reference Information
5. Review & Sign

After you submit your application electronically via or by mailing a paper application, the consolidation servicer selected will complete the actions required to consolidate your eligible loans. The consolidation servicer will be your point of contact for any questions you may have related to your consolidation application.

It is critical that you continue making payments, if required, to the holders or servicers of the loans you want to consolidate until your consolidation servicer informs you that the underlying loans have been paid off.

Oh, and your credit does not need to be great to consolidate. In fact the Department of Education says, “Does my debt to income ratio, credit score, or employment status count against me? These factors aren’t taken into account when your credit history is reviewed. A lack of credit is not considered adverse credit.” As long as your current loans are not in default, you should be good to go.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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