Under section 741(f) or 836(h) of the Act, the Secretary may agree to repay a portion of an individual's educational loans in return for the individual's agreement to practice his or her profession in an area in need of health manpower. However, a Scholarship Program participant may not enter into an agreement with the Secretary under section 741(f) or 836(h) of the Act, until either:

(a) The participant has completed the service obligation under the Scholarship Program,

(b) The Secretary has recovered from the participant an amount determined under § 62.10, or

(c) Any service or payment obligation has been waived under § 62.12.

In no case shall a scholarship received under these regulations be considered an educational loan for the purposes of section 741(f) or 836(h) of the Act.