1. A recipient of financial assistance under sections 340.381 to 340.396 who does not meet the qualified employment obligations agreed upon by contract under section 340.387 shall begin repayment of the loan principal and interest in accordance with the contract within six months of the first day on which the recipient did not meet the qualified employment obligations. If a qualified applicant ceases his or her study prior to successful completion of a degree or graduation from the college, interest at the rate specified in section 340.387 shall be charged on the amount of financial assistance received from the state under the provisions of sections 340.381 to 340.396, and repayment, in accordance with the contract, shall begin within ninety days of the date the financial aid recipient ceased to be an eligible student. All funds repaid by recipients of financial assistance to the department shall be deposited in the veterinary student loan payment fund for use pursuant to sections 340.381 to 340.396.

2. The department shall grant a deferral of interest and principal payments to a recipient of financial assistance under sections 340.381 to 340.396 who is pursuing a post-degree training program, is on active duty in any branch of the Armed Forces of the United States, or upon special conditions established by the department. The deferral shall not exceed four years. The status of each deferral shall be reviewed annually by the department to ensure compliance with the intent of this section.