10 U.S.C. § 16301 — Education loan repayment program: members of Selected Reserve

(a) (1) Subject to the rest of this section, the Secretary of Defense may repay: (A) loans made, insured, or guaranteed under Part B of Title IV of the Higher Education Act of 1965 (the old guaranteed student loan program); (B) loans made under Part D of that title (the William D. Ford Federal Direct Loan Program); (C) loans made under Part E of that title (Perkins-type loans); or (D) education loans made by a lender that is (i) a state agency or instrumentality, (ii) a financial or credit institution, including an insurance company, supervised by a federal or state regulator, (iii) a pension fund the Secretary has approved for this purpose, or (iv) a nonprofit private lender that a state designates, regulates, and the Secretary approves for this purpose. Repayment is based on each complete year of service the borrower performs. (2) The Secretary of Defense may repay these loans only for someone who serves in the Selected Reserve of the Ready Reserve, in an officer program or military specialty the Secretary of Defense specifies. The Secretary may repay a loan only if the person performed that service after the loan was made. (b) Each year of service can pay off the greater of 15% of the loan or $1,000, plus any interest that accrues during the current year. (c) If only part of a loan is repaid in a given year, interest on the rest keeps building and is paid the normal way. For this section, interest that built up in prior years counts as part of the total loan amount being repaid. (d) This section does not allow refunding of any loan repayment already made. (e) A person who switches during the year from service that qualifies them under this section to service that qualifies them under the similar loan-repayment program in section 2171 (or the reverse) is eligible to have a portion of the loan repaid, based on giving fractional credit for the part of the year served under each program, following the rules of the Secretary concerned. (f) The Secretary of Defense must, by regulation, set a schedule for dividing up available funds if, in a given year, there is not enough money to cover everyone eligible for repayment under this section and under section 2171(a). (g) The Secretary of Homeland Security may repay these loans and otherwise administer this section for members of the Coast Guard Reserve's Selected Reserve, when the Coast Guard is not operating as part of the Navy. (h) Except for a person described in subsection (e) who transfers to service under section 2171, a member of the armed forces who fails to complete the required period of service must repay the benefit, subject to the repayment rules of section 303a(e) or 373 of title 37. (i) The Secretary of Defense may issue regulations to carry out this section, including standards for which loans and payees qualify and other terms and conditions for loan repayments. These regulations may allow a lump-sum payment of a loan repayment owed under a written agreement that existed at the time of a member's death or disability.