(a) Based upon sufficient evidence to substantiate the grounds, the Secretary may grant an exception to the repayment requirement in Sec. 304.30(j), in whole or part, if the scholar--
(1) Is unable to continue the course of study in Sec. 304.30 or perform the service obligation because of a permanent disability; or
(2) Has died.
(b) Based upon sufficient evidence to substantiate the grounds, the Secretary may grant a deferral of the repayment requirement in Sec. 304.30(j) during the time the scholar--
(1) Is engaging in a full-time course of study at an institution of higher education;
(2) Is serving on active duty as a member of the armed services of the United States;
(3) Is serving as a volunteer under the Peace Corps Act; or
(4) Is serving as a full-time volunteer under title I of the Domestic Volunteer Service Act of 1973. (Authority: 20 U.S.C. 1462(h))