(a) Repayment amount.

(1) VA may pay no more than $40,000 in educational loan repayment for each year of obligated service for a period not to exceed four years for a total payment of $160,000.00.

(2) An educational loan repayment may not exceed the actual amount of principal and interest on an educational loan or loans.

(b) Payment. VA will pay the participant, or the lending institution on behalf of the participant, directly for the principal and interest on the participant's educational loans. Payments will be made monthly or annually for each applicable service period, depending on the terms of the agreement. Participants must provide VA documentation that shows the amounts that were credited or posted by the lending institution to a participant's educational loan during an obligated service period. VA will issue payments after the participant commences the period of obligated service. Payments are exempt from Federal taxation.

(c) Waiver of maximum amount of payment. VA may waive the limitations under paragraph (a)(1) of this section to participants of the SELRP if VA determines that there is a shortage of qualified employees due to either the location of where the participant will serve the period of obligated service or the requirements of the position that the participant will hold in VA. However, the waiver may not exceed the actual amount of the principal and the interest on the participant's loans payable to or for that participant.