1. (a) A scholarship will become a loan if the recipient:

   1. (1) Fails to maintain satisfactory academic progress as described in §22.167 of this subchapter (relating to Eligible Students);

   2. (2) Withdraws from the scholarship program, as indicated through:

      1. (A) withdrawal or removal from the institution of higher education or private or independent institution of higher education or that institution's ROTC program or other undergraduate officer commissioning program, without subsequent enrollment in another institution of higher education or private or independent institution of higher education and that subsequent institution's ROTC program or other undergraduate officer commissioning program; or
      2. (B) withdrawal or removal from the officer commissioning program of the Texas State Guard; or

   3. (3) Fails to fulfill one of the following:

      1. (A) a four-year commitment or honorable discharge as a member of the Texas Army National Guard, Texas Air National Guard, Texas State Guard, United States Coast Guard, or United States Merchant Marine; or
      2. (B) a contract to serve as a commissioned officer in any branch of the armed services of the United States.
2. (b) For the purposes of subsection (a)(3)(B) of this section, a recipient is considered to have fulfilled a contract to serve after four years of service or upon honorable discharge.
3. (c) A scholarship converts to a loan if documentation of the contract or commitment outlined in subsection (a)(3) of this section is not submitted to the Coordinating Board within twelve months of graduation with the student's intended degree while receiving a scholarship under this subchapter. Subsequent filing of this documentation will revert the loan back to a scholarship.
4. (d) If a recipient's scholarship converts to a loan, the recipient cannot regain eligibility for the Scholarship in any subsequent academic year.
5. (e) If a recipient requires a temporary leave of absence from the institution of higher education, private or independent institution of higher education, and/or the ROTC program or another undergraduate officer commissioning program for personal reasons or to provide service for the Texas Army National Guard, Texas Air National Guard, Texas State Guard, United States Coast Guard, or United States Merchant Marine for fewer than twelve months, the Coordinating Board may agree to not convert the scholarship to a loan during that time.
6. (f) If a recipient is required to provide more than twelve months of service in the Texas Army National Guard, Texas Air National Guard, Texas State Guard, United States Coast Guard, or United States Merchant Marine as a result of a national emergency, the Coordinating Board shall grant that recipient additional time to meet the graduation and service requirements specified in the scholarship agreement.

7. (g) Notwithstanding subsection (a) of this section, a scholarship does not convert to a loan if the recipient is unable to meet the obligations of the agreement solely as a result of:

   1. (1) a physical inability, subject to appropriate verification to the satisfaction of the Coordinating Board; or
   2. (2) an exceptional circumstance beyond the recipient's control, as determined by the Coordinating Board.
8. (h) If the Coordinating Board determines that a student who entered into an agreement with the Board under this subchapter was erroneously removed from the scholarship program established under this subchapter, the Coordinating Board shall reinstate the student's scholarship if the student is currently enrolled in a public or private institution of higher education in this state.
9. (i) Scholarships that convert to loans under this section are subject to the applicable requirements of chapter 24 of this title (relating to Student Loan Servicing).

Source Note:The provisions of this §22.170 adopted to be effective November 30, 2009, 34 TexReg 8530; amended to be effective September 6, 2011, 36 TexReg 5686; transferred effective June 1, 2017, as published in the Texas Register May 19, 2017, 42 TexReg 2739; amended to be effective November 29, 2017, 42 TexReg 6625; amended to be effective May 29, 2018, 43 TexReg 3353; amended to be effective August 3, 2020, 45 TexReg 5341; amended to be effective May 16, 2024, 49 TexReg 3276; amended to be effective May 15, 2025, 50 TexReg 763; amended to be effective November 13, 2025, 50 TexReg 7268.