[Code of Federal Regulations]
[Title 34, Volume 2]
[Revised as of July 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 34CFR386.43]

[Page 453]
 
                           TITLE 34--EDUCATION
 
            REHABILITATIVE SERVICES, DEPARTMENT OF EDUCATION
 
PART 386--REHABILITATION TRAINING: REHABILITATION LONG-TERM TRAINING--Table of Contents
 
          Subpart E--What Conditions Must Be Met by a Scholar?
 
Sec.  386.43  What are the consequences of a scholar's failure to meet the terms and conditions of a scholarship agreement?

    In the event of a failure to meet the terms and conditions of a 
scholarship agreement or to obtain a deferral or an exception as 
provided in Sec.  386.41, the scholar shall repay all or part of the 
scholarship as follows:
    (a) Amount. The amount of the scholarship to be repaid is 
proportional to the employment obligation not completed.
    (b) Interest rate. The Secretary charges the scholar interest on the 
unpaid balance owed in accordance with 31 U.S.C. 3717.
    (c) Interest accrual. (1) Interest on the unpaid balance accrues 
from the date the scholar is determined to have entered repayment status 
under paragraph (e) of this section.
    (2) Any accrued interest is capitalized at the time the scholar's 
repayment schedule is established.
    (3) No interest is charged for the period of time during which 
repayment has been deferred under Sec.  386.41.
    (d) Collection costs. Under the authority of 31 U.S.C. 3717, the 
Secretary may impose reasonable collection costs.
    (e) Repayment status. A scholar enters repayment status on the first 
day of the first calendar month after the earliest of the following 
dates, as applicable:
    (1) The date the scholar informs the Secretary he or she does not 
plan to fulfill the employment obligation under the agreement.
    (2) Any date when the scholar's failure to begin or maintain 
employment makes it impossible for that individual to complete the 
employment obligation within the number of years required in Sec.  
386.34(c)(1).
    (f) Amounts and frequency of payment. The scholar shall make 
payments to the Secretary that cover principal, interest, and collection 
costs according to a schedule established by the Secretary.

(Authority: 29 U.S.C. 711(c) and 771a(b))