(a) In General.—Education debt reduction payments under the Education Debt Reduction Program shall consist of—

(1) payments to individuals selected to participate in the program of principal and interest on loans described in section 7682(a)(2) of this title; or

(2) payments for the principal and interest on such loans of such individuals to the holders of such loans.

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(b) Frequency of Payment.—(1) The Secretary may make education debt reduction payments to or for any given participant in the Education Debt Reduction Program on a monthly or annual basis, as determined by the Secretary.

(2) The Secretary shall make such payments at the end of the period determined by the Secretary under paragraph (1).

(c) Performance Requirement.—The Secretary may make education debt reduction payments to or for a participant in the Education Debt Reduction Program for a period only if the Secretary determines that the individual maintained an acceptable level of performance in the position or positions served by the participant during the period.

(d) Maximum Annual Amount.—(1) The amount of education debt reduction payments made to or for a participant under the Education Debt Reduction Program may not exceed $200,000 over a total of five years of participation in the Program, of which not more than $40,000 of such payments may be made in each year of participation in the Program.

(2)(A) The Secretary may waive the limitations under paragraph (1) in the case of a participant described in subparagraph (B). In the case of such a waiver, the total amount of education debt repayments payable to or for that participant is the total amount of the principal and the interest on the participant’s loans referred to in subsection (a).

(B) A participant described in this subparagraph is a participant in the Program who the Secretary determines serves in a position for which there is a shortage of qualified employees by reason of either the location or the requirements of the position.