(2) owes any amount of principal or interest under a loan, the proceeds of which were used by or on behalf of that individual to pay costs relating to a course of education or training which led to a degree that qualified the individual for the position referred to in paragraph (1); and
(3) is—
(A) recently graduated from an accredited medical or osteopathic school and matched to an accredited residency program in a medical specialty described in section 7692 of this title; or
(B) a physician in training in a medical specialty described in section 7692 of this title with more than 2 years remaining in such training.
(b) Preferences.— In selecting individuals for participation in the Specialty Education Loan Repayment Program under this subchapter, the Secretary may give preference to the following:
(1) Individuals who are, or will be, participating in residency programs in health care facilities—
(A) located in rural areas;
(B) operated by Indian tribes, tribal organizations, or the Indian Health Service; or
(C) affiliated with underserved health care facilities of the Department.
(2) Veterans.
(c) Covered Costs.— For purposes of subsection (a)(2), costs relating to a course of education or training include—
(1) tuition expenses;
(2) all other reasonable educational expenses, including expenses for fees, books, equipment, and laboratory expenses; and
section 7693 of title 38, United States Code, as enacted by subsection (a), the Secretary of Veterans Affairs shall determine whether a facility of the Department is underserved based on the criteria developed under section 401 of this Act [