1

PART 386—REHABILITATION TRAINING: REHABILITATION LONG-TERM 

TRAINING

Subpart A—General

386.1 What is the Rehabilitation Long-Term Training 

program?

386.2 Who is eligible for an award?

386.3 What regulations apply?

386.4 What definitions apply?

Subpart B [Reserved]

Subpart C—How Does the Secretary Make an Award?

386.20 What additional selection criteria are used under 

this program?

386.21 What are the application procedures for these 

programs? 

Subpart D—What Conditions Must Be Met After an Award?

386.30 What are the matching requirements?

386.31 What are the requirements for directing grant 

funds?

386.32 What are allowable costs?

386.33 What are the requirements for grantees in 

disbursing scholarships?

386.34 What assurances must be provided by a grantee that 

intends to provide scholarships?
2

386.35 What information must be provided by a grantee that 

is an institution of higher education to assist designated 

State agencies?

386.36 What is a grantee’s liability for failing to 

provide accurate and complete scholar information to the 

Department?

Subpart E—What Conditions Must Be Met by a Scholar?

386.40 What are the requirements for scholars?

386.41 Under what circumstances does the Secretary grant a 

deferral or exception to performance or repayment under a 

scholarship agreement?

386.42 What must a scholar do to obtain an exception or a 

deferral to performance or repayment under a scholarship 

agreement?

386.43 What are the consequences of a scholar's failure to 

meet the terms and conditions of a scholarship agreement?

AUTHORITY: Sections 12(c) and 302 of the Rehabilitation Act 

of 1973, as amended; 29 U.S.C. 709(c) and 772, unless 

otherwise noted.

Subpart A—General

§386.1 What is the Rehabilitation Long-Term Training 

program?

(a) The Rehabilitation Long-Term Training program 

provides financial assistance for—
3

(1) Projects that provide basic or advanced training 

leading to an academic degree in one of those fields of 

study identified in paragraph (b) of this section;

(2) Projects that provide a specified series of 

courses or program of study leading to award of a 

certificate in one of those fields of study identified in 

paragraph (b) of this section; and

(3) Projects that provide support for medical 

residents enrolled in residency training programs in the 

specialty of physical medicine and rehabilitation.

(b) The Rehabilitation Long-Term Training program is 

designed to provide academic training that leads to an 

academic degree or academic certificate in areas of 

personnel shortages identified by the Secretary and 

published in a notice in the FEDERAL REGISTER. These areas 

may include—

(1) Assisting and supporting individuals with 

disabilities pursuing self-employment, business ownership, 

and telecommuting;

(2) Vocational rehabilitation counseling;

(3) Rehabilitation technology, including training on 

its use, applications, and benefits;

(4) Rehabilitation medicine;

(5) Rehabilitation nursing;
4

(6) Rehabilitation social work;

(7) Rehabilitation psychiatry;

(8) Rehabilitation psychology;

(9) Rehabilitation dentistry;

(10) Physical therapy;

(11) Occupational therapy;

(12) Speech pathology and audiology;

(13) Physical education;

(14) Therapeutic recreation;

(15) Community rehabilitation program personnel;

(16) Prosthetics and orthotics;

(17) Rehabilitation of individuals who are blind or 

visually impaired, including rehabilitation teaching and 

orientation and mobility;

(18) Rehabilitation of individuals who are deaf or 

hard of hearing;

(19) Rehabilitation of individuals who are mentally 

ill;

(20) Undergraduate education in the rehabilitation 

services;

(21) Independent living;

(22) Client assistance;

(23) Administration of community rehabilitation 

programs;
5

(24) Rehabilitation administration;

(25) Vocational evaluation and work adjustment;

(26) Services to individuals with specific 

disabilities or specific impediments to rehabilitation, 

including individuals who are members of populations that 

are unserved or underserved by programs under this Act;

(27) Job development and job placement services to 

individuals with disabilities;

(28) Supported employment services and customized

employment services for individuals with the most 

significant disabilities;

(29) Specialized services for individuals with 

significant disabilities;

(30) Other fields contributing to the rehabilitation 

of individuals with disabilities.

(Authority: Sections 12 and 302 of the Rehabilitation 

Act of 1973, as amended; 29 U.S.C. 709 and 772)

§386.2 Who is eligible for an award?

Those agencies and organizations eligible for 

assistance under this program are described in 34 CFR 

385.2.

(Authority: Section 302(a) of the Rehabilitation Act 

of 1973, as amended; 29 U.S.C. 772(a))

§386.3 What regulations apply?
6

The following regulations apply to the Rehabilitation 

Training: Rehabilitation Long-Term Training program:

(a) The regulations in this part 386.

(b) The regulations in 34 CFR part 385.

(Authority: Section 302(a) of the Rehabilitation Act 

of 1973, as amended; 29 U.S.C. 772(a))

§386.4 What definitions apply?

The following definitions apply to this program:

(a) Definitions in 34 CFR 385.4.

(b) Other definitions. The following definitions also 

apply to this part:

Academic year means a full-time course of study—

(1) Taken for a period totaling at least nine months; 

or

(2) Taken for the equivalent of at least two 

semesters, two trimesters, or three quarters.

Certificate means a recognized educational credential 

awarded by a grantee under this part that attests to the 

completion of a specified series of courses or program of 

study.

Professional corporation or professional 

practice means—

(1) A professional service corporation or practice 

formed by one or more individuals duly authorized to render 
7

the same professional service, for the purpose of rendering 

that service; and

(2) The corporation or practice and its members are 

subject to the same supervision by appropriate State 

regulatory agencies as individual practitioners.

Related agency means—

(1) An American Indian rehabilitation program; or

(2) Any of the following agencies that provide 

services to individuals with disabilities under an 

agreement or other arrangement with a designated State 

agency in the area of specialty for which training is 

provided:

(i) A Federal, State, or local agency.

(ii) A nonprofit organization.

(iii) A professional corporation or professional 

practice group.

Scholar means an individual who is enrolled in a 

certificate or degree granting course of study in one of 

the areas listed in §386.1(b) and who receives scholarship 

assistance under this part.

Scholarship means an award of financial assistance to 

a scholar for training and includes all disbursements or 

credits for student stipends, tuition and fees, books and 
8

supplies, and student travel in conjunction with training 

assignments.

State vocational rehabilitation agency means the 

designated State agency as defined in 34 CFR 361.5(c)(13).

(Authority: Section 12(c) of the Rehabilitation Act 

of 1973, as amended; 29 U.S.C. 709(c))

Subpart B [Reserved]

Subpart C—How Does the Secretary Make an Award?

§386.20 What additional selection criteria are used under 

this program?

In addition to the criteria in 34 CFR 385.31(c), the 

Secretary uses the following additional selection criteria 

to evaluate an application:

(a) Relevance to State-Federal vocational 

rehabilitation service program. (1) The Secretary reviews 

each application for information that shows that the 

proposed project appropriately relates to the mission of 

the State-Federal vocational rehabilitation service 

program.

(2) The Secretary looks for information that shows 

that the project can be expected either—

(i) To increase the supply of trained personnel 

available to State and other public or nonprofit agencies 

involved in the rehabilitation of individuals with 
9

disabilities through degree or certificate granting 

programs; or

(ii) To improve the skills and quality of 

professional personnel in the rehabilitation field in which 

the training is to be provided through the granting of a 

degree or certificate.

(b) Nature and scope of curriculum. (1) The 

Secretary reviews each application for information that 

demonstrates the adequacy of the proposed curriculum.

(2) The Secretary looks for information that shows—

(i) The scope and nature of the coursework reflect 

content that can be expected to enable the achievement of 

the established project objectives;

(ii) The curriculum and teaching methods provide for 

an integration of theory and practice relevant to the 

educational objectives of the program;

(iii) There is evidence of educationally focused 

practical and other field experiences in settings that 

ensure student involvement in the provision of vocational 

rehabilitation, supported employment, customized 

employment, pre-employment transition services, transition 

services, or independent living rehabilitation services to 

individuals with disabilities, especially individuals with 

significant disabilities;
10

(iv) The coursework includes student exposure to 

vocational rehabilitation, supported employment, customized 

employment, employer engagement, and independent living 

rehabilitation processes, concepts, programs, and services; 

and

(v) If applicable, there is evidence of current 

professional accreditation by the designated accrediting 

agency in the professional field in which grant support is 

being requested.

(Authority: Section 12(c) and 302 of the 

Rehabilitation Act of 1973, as amended; 29 U.S.C. 709(c) 

and 772)

§386.21 What are the application procedures for these 

programs?

(a) Application. No grant shall be awarded or 

contract entered into under the Rehabilitation Long-Term 

Training program unless the applicant has submitted to the 

Secretary an application at such time, in such form, in 

accordance with such procedures identified by the Secretary 

and, and including such information as the Secretary may 

require, including—

(1) A description of how the designated State unit or 

units will participate in the project to be funded under 

the grant or contract, including, as appropriate, 
11

participation on advisory committees, as practicum sites, 

in curriculum development, and in other ways so as to build 

closer relationships between the applicant and the 

designated State unit and to encourage students to pursue 

careers in public vocational rehabilitation programs; 

(2) The identification of potential employers that 

provide employment that meets the requirements in 

§386.33(c); and 

(3) An assurance that data on the employment of 

graduates or trainees who participate in the project is 

accurate. 

(b) The Secretary gives the designated State agency an 

opportunity to review and comment on applications submitted 

from within the State that it serves. The procedures to be 

followed by the applicant and the State are in 34 CFR 

75.155–75.159.

(Authority: Sections 12(c) and 302(b)(2) and (d) of 

the Rehabilitation Act of 1973, as amended; 29 U.S.C. 

709(c) and 772(b)(2) and (d))

Subpart D—What Conditions Must Be Met After an Award?

§386.30 What are the matching requirements?

The grantee is required to contribute at least ten

percent of the total cost of a project under this program. 

However, if the grantee can demonstrate that it has 
12

insufficient resources to contribute the entire match but 

that it can fulfill all other requirements for receiving an 

award, the Secretary may waive part of the non-Federal 

share of the cost of the project after negotiations with 

Department staff.

(Authority: Section 12(c) of the Rehabilitation Act 

of 1973, as amended; 29 U.S.C. 709(c))

§386.31 What are the requirements for directing grant 

funds?

(a) A grantee must use at least 65 percent of the 

total cost of a project under this program for scholarships 

as defined in §386.4.

(b) The Secretary may waive the requirement in (a) 

and award grants that use less than 65 percent of the total 

cost of the project for scholarships based upon the unique 

nature of the project, such as the establishment of a new 

training program or long-term training in an emerging field 

that does not award degrees or certificates.

(c) A scholar may not receive concurrent scholarships

from more than one project under this program. 

(Authority: Sections 12(c) and 302 of the 

Rehabilitation Act of 1973, as amended; 29 U.S.C. 709(c) 

and 772)

§386.32 What are allowable costs?
13

In addition to those allowable costs established in 

the Education Department General Administrative Regulations 

in 34 CFR 75.530 through 75.562, the following items are 

allowable under long-term training projects:

(a) Student stipends.

(b) Tuition and fees.

(c) Books and supplies.

(d) Student travel in conjunction with required 

practicum or internship.

(Authority: Sections 12(c) and 302 of the 

Rehabilitation Act of 1973, as amended; 29 U.S.C. 709(c) 

and 772)

§386.33 What are the requirements for grantees in 

disbursing scholarships?

Before disbursement of scholarship assistance to an 

individual, a grantee—

(a)(1) Must obtain documentation that the individual 

is—

(i) A U.S. citizen or national; or

(ii) A permanent resident of the Commonwealth of 

Puerto Rico, the United States Virgin Islands, Guam, 

American Samoa, or the Commonwealth of the Northern Mariana 

Islands;
14

(2) Must confirm from documentation issued to the 

individual by the U.S. Department of Homeland Security that 

he or she—

(i) Is a lawful permanent resident of the United 

States; or

(ii) Is in the United States for other than a 

temporary purpose with the intention of becoming a citizen 

or permanent resident; and

(b) Must confirm that the applicant has expressed 

interest in a career in clinical practice, administration, 

supervision, teaching, or research in the vocational 

rehabilitation, supported employment, or independent living 

rehabilitation of individuals with disabilities, especially 

individuals with significant disabilities;

(c) Must obtain documentation, as described in 

§386.40(a)(6), that the individual expects to seek and 

maintain employment in a designated State agency or in a 

related agency as defined in §386.4 where

(1) The employment is in the field of study in which 

the training was received or

(2) Where the job functions are directly relevant to 

the field of study in which the training was received.

(d) Must ensure that the scholarship, when added to 

the amount of financial aid the scholar receives for the 
15

same academic year under title IV of the Higher Education 

Act, does not exceed the scholar's cost of attendance;

(e) Must limit scholarship assistance to no more than 

four academic years, unless the grantee provides an 

extension consistent with the institution's accommodations 

under section 504 of the Act; and

(f) Must obtain a Certification of Eligibility for 

Federal Assistance from each scholar as prescribed in 34 

CFR 75.60, 75.61, and 75.62.

(Approved by the Office of Management and Budget under 

control number 1820-0018)

(Authority: Sections 12(c) and 302(b) of the 

Rehabilitation Act of 1973, as amended; 29 U.S.C. 709(c) 

and 772(b))

§386.34 What assurances must be provided by a grantee that 

intends to provide scholarships?

A grantee under this part that intends to grant 

scholarships for any academic year must provide the 

following assurances before an award is made:

(a) Requirement for agreement. No individual will be 

provided a scholarship without entering into a written 

agreement containing the terms and conditions required by 

this section. An individual will sign and date the 

agreement prior to the initial disbursement of scholarship 
16

funds to the individual for payment of the individual's 

expenses. An agreement must be executed between the 

grantee and scholar for each subsequent year that 

scholarship funds are disbursed and must contain the terms 

and conditions required by this section.

(b) Disclosure to applicants. The terms and 

conditions of the agreement between the grantee and a 

scholar will be fully disclosed in the application for 

scholarship.

(c) Form and terms of agreement. Prior to granting 

each year of a scholarship, the grantee will require each 

scholar to enter into a signed written agreement in which 

the scholar agrees to the terms and conditions set forth in 

§386.40. This agreement must be in the form and contain 

any additional terms and conditions that the Secretary may 

require.

(d) Executed agreement. The grantee will provide an 

original signed executed payback agreement upon request to 

the Secretary.

(e) Standards for satisfactory progress. The grantee 

will establish, publish, and apply reasonable standards for 

measuring whether a scholar is maintaining satisfactory 

progress in the scholar's course of study. The Secretary 
17

considers an institution's standards to be reasonable if 

the standards—

(1) Conform with the standards of satisfactory 

progress of the nationally recognized accrediting agency 

that accredits the institution's program of study, if the 

institution's program of study is accredited by such an 

agency, and if the agency has those standards;

(2) For a scholar enrolled in an eligible program who 

is to receive assistance under the Rehabilitation Act, are 

the same as or stricter than the institution's standards 

for a student enrolled in the same academic program who is 

not receiving assistance under the Rehabilitation Act; and

(3) Include the following elements:

(i) Grades, work projects completed, or comparable 

factors that are measurable against a norm.

(ii) A maximum timeframe in which the scholar must

complete the scholar's educational objective, degree, or 

certificate.

(iii) Consistent application of standards to all 

scholars within categories of students; e.g., full-time, 

part-time, undergraduates, graduate students, and students 

attending programs established by the institution.
18

(iv) Specific policies defining the effect of course 

incompletes, withdrawals, repetitions, and noncredit 

remedial courses on satisfactory progress.

(v) Specific procedures for appeal of a determination 

that a scholar is not making satisfactory progress and for 

reinstatement of aid.

(f) Exit certification. (1) At the time of exit from 

the program, the grantee will provide the following

information to the scholar:

(i) The name of the institution and the number of the 

Federal grant that provided the scholarship.

(ii) the total amount of scholarship assistance 

received subject to §386.40(a)(6).

(iii) The scholar's field of study and the obligation 

of the scholar to perform the service obligation with 

employment that meets the requirements in §386.40(a)(6)(i).

(iv) The number of years the scholar needs to work to 

satisfy the work requirements in §386.40(a)(6)(ii).

(v) The time period during which the scholar must 

satisfy the work requirements in §386.40(a)(7).

(vi) As applicable, all other obligations of the 

scholar in §386.40.

(2) Upon receipt of this information from the 

grantee, the scholar must provide written and signed 
19

certification to the grantee that the information is 

correct.

(g) Tracking system. The grantee has established 

policies and procedures to determine compliance of the 

scholar with the terms of the signed payback agreement. In 

order to determine whether a scholar has met the terms and 

conditions set forth in §386.40, the tracking system must 

include for each employment position maintained by the 

scholar—

(1) Documentation of the employer's name, address, 

dates of the scholar's employment, name of supervisor, 

position title, a description of the duties the scholar 

performed, and whether the employment is full- or parttime;

(2) Documentation of how the employment meets the 

requirements in §386.40(a)(6); and

(3) In the event a grantee is experiencing difficulty 

locating a scholar, documentation that the grantee has 

checked with existing tracking systems operated by alumni 

organizations.

(h) Reports. The grantee will make annual reports to 

the Secretary, unless more frequent reporting is required 

by the Secretary, that are necessary to carry out the 

Secretary's functions under this part.
20

(i) Repayment status. The grantee will immediately 

report to the Secretary whenever a scholar has entered 

repayment status under §386.43(e) and provide all necessary 

documentation in support thereof.

(j) Records. The grantee will maintain accurate and 

complete records as outlined in paragraphs (g) and (h) of 

this section for a period of time not less than one year 

beyond the date that all scholars provided financial 

assistance under the grant--

(1) Have completed their service obligation or 

(2) Have entered into repayment status pursuant to 

§386.43(e). 

(Approved by the Office of Management and Budget under 

control number 1820-0018)

(Authority: Sections 12(c) and 302(b) of the 

Rehabilitation Act of 1973, as amended; 29 U.S.C. 709(c) 

and 772(b))

§386.35 What information must be provided by a grantee 

that is an institution of higher education to assist 

designated State agencies?

A grantee that is an institution of higher education 

provided assistance under this part must cooperate with the 

following requests for information from a designated State 

agency:
21

(a) Information required by section 101(a)(7) of the 

Act which may include, but is not limited to—

(1) The number of students enrolled by the grantee in 

rehabilitation training programs; and

(2) The number of rehabilitation professionals 

trained by the grantee who graduated with certification or 

licensure, or with credentials to qualify for certification 

or licensure, during the past year.

(b) Information on the availability of rehabilitation 

courses leading to certification or licensure, or the 

credentials to qualify for certification or licensure, to 

assist State agencies in the planning of a program of staff 

development for all classes of positions that are involved 

in the administration and operation of the State vocational 

rehabilitation program.

(Approved by the Office of Management and Budget under 

control number 1820-0018)

(Authority: Sections 12(c) and 302 of the 

Rehabilitation Act of 1973, as amended; 29 U.S.C. 709(c) 

and 772)

§386.36 What is a grantee’s liability for failing to 

provide accurate and complete scholar information to the 

Department?
22

The Department may recover, in whole or in part, from 

the grantee the debt amount and any collection costs 

described in §§386.40 and 386.43, if the Department:

(a) Is unable to collect, or improperly collected, 

some or all of these amounts or costs from a scholar and

(b) Determines that the grantee failed to provide to 

the Department accurate and complete documentation 

described in §386.34.

(Authority: Sections 12(c) and 302 of the 

Rehabilitation Act of 1973, as amended; 29 U.S.C. 709(c) 

and 772)

Subpart E—What Conditions Must Be Met by a Scholar?

§386.40 What are the requirements for scholars?

(a) A scholar must—

(1) Be enrolled in a course of study leading to a 

certificate or degree in one of the fields designated in 

§386.1(b);

(2) Receive the training at the educational 

institution or agency designated in the scholarship; 

(3) Not accept payment of educational allowances from 

any other entity if that allowance conflicts with the 

scholar’s obligation under section 302 of the Act and this 

part;
23

(4) Enter into a signed written agreement with the 

grantee, prior to the receipt of scholarship funds, as 

required in §386.34(c);

(5) Maintain satisfactory progress toward the 

certificate or degree as determined by the grantee; 

(6) Upon exiting the training program under paragraph 

(a)(1) of this section, subsequently maintain employment on 

a full- or part-time basis subject to the provisions in 

paragraph (b) of this section —

(i)(A) In a State vocational rehabilitation agency or 

related agency as defined in §386.4 and

(B)(1) In the field of study for which training 

was received, or

(2) Where the field of study is directly relevant to 

the job functions performed; and

(ii) For a period of at least the full-time 

equivalent of two years for every academic year for which 

assistance under this section was received subject to the 

provisions in paragraph (c) of this section for part-time 

coursework; 

(7) Complete the service obligation within a period, 

beginning after the recipient exits the training program 

for which the scholarship was awarded, of not more than the 

sum of the number of years in the period described in 
24

paragraph (a)(6)(ii) of this section and two additional 

years;

(8) Repay all or part of any scholarship received, 

plus interest, if the individual does not fulfill the 

requirements of this section, except as provided for in 

§386.41 for exceptions and deferrals; and 

(9) Provide the grantee all requested information 

necessary for the grantee to meet the exit certification 

requirements in §386.34(f) and, as necessary, thereafter 

for any changes necessary for the grantee to monitor the 

scholar’s service obligation under this section.

(b)(1) The period of qualifying employment that meets 

the requirements of paragraph (a)(6) of this section may 

begin--

(i) For courses of study of at least one year, only 

subsequent to the completion of one academic year of the 

training for which the scholarship assistance was received.

(ii) For courses of study of less than one year, only 

upon completion of the training for which the scholarship 

assistance was received. 

(2) The work completed as part of an internship, 

practicum, or any other work-related requirement necessary 

to complete the educational program is not considered 

qualifying employment.
25

(c) If the scholar is pursuing coursework on a parttime basis, the service obligation for these part-time 

courses is based on the equivalent total of actual academic 

years of training received.

(d) If a scholar fails to provide the information in 

paragraph (a)(9) of this section or otherwise maintain 

contact with the grantee pursuant to the terms of the 

signed payback agreement and enters into repayment status 

pursuant to §386.43, the scholar will be held responsible 

for any costs assessed in the collection process under that 

section even if that information is subsequently provided.

(Authority: Sections 12(c) and 302(b) of the 

Rehabilitation Act of 1973, as amended; 29 U.S.C. 709(c) 

and 772(b))

§386.41 Under what circumstances does the Secretary grant 

a deferral or exception to performance or repayment under a 

scholarship agreement?

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)(6) may be 

granted, in whole or in part, by the Secretary as follows:

(a) Repayment is not required if the scholar—
26

(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:

(i) The disability had not been diagnosed at the time 

the scholar signed the agreement in §386.34(c); or

(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) Has died.

(b) Repayment of a scholarship may be deferred during 

the time the scholar is—

(1) Engaging in a full-time course of study in the 

field of rehabilitation at an institution of higher 

education;

(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) Serving as a volunteer under the Peace Corps Act;

(4) Serving as a full-time volunteer under title I of 

the Domestic Volunteer Service Act of 1973;

(5) Experiencing a temporary disability that affects 

the scholar’s ability to continue the course of study or 
27

perform the work obligation, for a period not to exceed 

three years; or

(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))

§386.42 What must a scholar do to obtain an exception or a 

deferral to performance or repayment under a scholarship 

agreement?

To obtain an exception or a deferral to performance or 

repayment under a scholarship agreement under §386.41, a 

scholar must provide the following:

(a) Written application. A written application must 

be made to the Secretary to request a deferral or an 

exception to performance or repayment of a scholarship.
28

(b) Documentation. Sufficient documentation must be 

provided to substantiate the grounds for all deferrals or 

exceptions, including the following, as appropriate.

(1) Documentation necessary to substantiate an 

exception under §386.41(a)(1) or a deferral under 

§386.41(b)(5) must include a letter from a qualified 

physician or other medical professional, on official 

stationery, attesting how the disability affects the 

scholar in completing the course of study or performing the 

work obligation. The documentation must be less than three 

months old and include the scholar’s diagnosis and 

prognosis and ability to complete the course of study or 

work with accommodations.

(2) Documentation to substantiate an exception under 

§386.41(a)(2) must include a death certificate or other 

evidence conclusive under State law.

(3) Documentation necessary to substantiate a 

deferral or exception under 386.41(c) based upon the 

disability of a spouse, partner, or child must meet the 

criteria, as relevant, in paragraph (b)(1) of this section. 

(Approved by the Office of Management and Budget under 

control number 1820-0018)
29

(Authority: Sections 12(c) and 302 of the 

Rehabilitation Act of 1973, as amended; 29 U.S.C. 709(c) 

and 772)

§386.43 What are the consequences of a scholar's failure 

to meet the terms and conditions of a scholarship 

agreement?

In the event of a failure to meet the terms and 

conditions of a scholarship agreement or to obtain a 

deferral or an exception as provided in §386.41, the 

scholar must repay all or part of the scholarship as 

follows:

(a) Amount. The amount of the scholarship to be 

repaid is proportional to the employment obligation not 

completed.

(b) Interest rate. The Secretary charges the scholar 

interest on the unpaid balance owed in accordance with 31 

U.S.C. 3717.

(c) Interest accrual. (1) Interest on the unpaid 

balance accrues from the date the scholar is determined to 

have entered repayment status under paragraph (e) of this 

section.

(2) Any accrued interest is capitalized at the time 

the scholar's repayment schedule is established.
30

(3) No interest is charged for the period of time 

during which repayment has been deferred under §386.41.

(d) Collection costs. Under the authority of 31 

U.S.C. 3717, the Secretary may impose reasonable collection 

costs.

(e) Repayment status. A scholar enters repayment 

status on the first day of the first calendar month after 

the earliest of the following dates, as applicable:

(1) The date the scholar informs the Secretary he or 

she does not plan to fulfill the employment obligation 

under the agreement.

(2) Any date when the scholar's failure to begin or 

maintain employment makes it impossible for that individual 

to complete the employment obligation within the number of 

years required in §386.34(c)(1).

(f) Amounts and frequency of payment. The scholar 

shall make payments to the Secretary that cover principal, 

interest, and collection costs according to a schedule 

established by the Secretary.

(Authority: Sections 12(c) and 302(b) of the 

Rehabilitation Act of 1973, as amended; 29 U.S.C. 709(c) 

and 772(b))