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42 U.S. Code § 254o. Breach of scholarship contract or loan repayment contract
(a) Failure to maintain academic standing; dismissal from institution; voluntary termination; liability; failure to accept payment
(1) An individual who has entered into a written contract with the Secretary under section 254l of this title and who—
(A)
fails to maintain an acceptable level of academic standing in the educational institution in which he is enrolled (such level determined by the educational institution under regulations of the Secretary);
(B)
is dismissed from such educational institution for disciplinary reasons; or
(C)
voluntarily terminates the training in such an educational institution for which he is provided a scholarship under such contract, before the completion of such training,
in lieu of any service obligation arising under such contract, shall be liable to the United States for the amount which has been paid to him, or on his behalf, under the contract.
(2) An individual who has entered into a written contract with the Secretary under section 254l–1 of this title and who—
(A)
in the case of an individual who is enrolled in the final year of a course of study, fails to maintain an acceptable level of academic standing in the educational institution in which such individual is enrolled (such level determined by the educational institution under regulations of the Secretary) or voluntarily terminates such enrollment or is dismissed from such educational institution before completion of such course of study; or
(B)
in the case of an individual who is enrolled in a graduate training program, fails to complete such training program and does not receive a waiver from the Secretary under section 254l–1(b)(1)(B)(ii) of this title,
in lieu of any service obligation arising under such contract shall be liable to the United States for the amount that has been paid on behalf of the individual under the contract.