Based upon sufficient evidence to substantiate the grounds as detailed in § 386.42, a repayment exception to or deferral of the requirements of § 386.40(a)(7) may be granted, in whole or in part, by the Secretary as follows:

1. (a) Repayment is not required if the scholar—

   1. (1) Is unable to continue the course of study or perform the work obligation because of a permanent disability that meets one of the following conditions:

      1. (i) The disability had not been diagnosed at the time the scholar signed the agreement in § 386.34(c); or
      2. (ii) The disability did not prevent the scholar from performing the requirements of the course of study or the work obligation at the time the scholar signed the agreement in § 386.34(c) but subsequently worsened; or
   2. (2) Has died.

2. (b) Repayment of a scholarship may be deferred during the time the scholar is—

   1. (1) Engaging in a full-time course of study in the field of rehabilitation at an institution of higher education;
   2. (2) Serving on active duty as a member of the armed services of the United States for a period not in excess of four years;
   3. (3) Serving as a volunteer under the Peace Corps Act;
   4. (4) Serving as a full-time volunteer under title I of the Domestic Volunteer Service Act of 1973;
   5. (5) Experiencing a temporary disability that affects the scholar's ability to continue the course of study or perform the work obligation, for a period not to exceed three years; or

3. (c) Under limited circumstances as determined by the Secretary and based upon credible evidence submitted on behalf of the scholar, the Secretary may grant an exception to, or deferral of, the requirement to repay a scholarship in instances not specified in this section. These instances could include, but are not limited to, the care of a disabled spouse, partner, or child or the need to accompany a spouse or partner on active duty in the Armed Forces.

   (Authority: Sections 12(c) and 302(b) of the Rehabilitation Act of 1973, as amended; 29 U.S.C. 709(c) and 772(b))