(A) The Commission on Higher Education, in consultation with the staff of the South Carolina Student Loan Corporation, shall develop a loan repayment program through which talented and qualified state residents may attend state public or private colleges and universities for the purpose of providing incentives for enlisting or remaining in the South Carolina National Guard in areas of critical need. Areas of critical need must be defined annually for that purpose by the Commission on Higher Education in consultation with the State Adjutant General. The Commission on Higher Education shall promulgate appropriate regulations to set forth the terms of the loan repayment program. The regulations must define limitations on monetary repayment amounts, successful participation within the National Guard, successful school matriculation, and other requirements for participation in the loan repayment program. In case of failure to complete the term of enlistment, failure to participate successfully in the National Guard, noncompliance by a borrower with the terms of the loan, or failure to comply with regulations of the program, the borrowers participation in the loan repayment program may be terminated and the borrower remains subject to those provisions as provided in the loan documents. The borrower shall execute the necessary legal documents to reflect his obligation to the lending entity and the terms and conditions of the loan. The loan program, as implemented in this section, must be administered by a separate student loan provider. Of the funds appropriated by the General Assembly for the loan repayment program, these funds must be retained in a separate account and used on a revolving basis for purposes of the loan repayment program and its administration. The State Treasurer shall disburse funds from this account as requested by the Commission on Higher Education and upon warrant of the Comptroller General; provided, however, that no more than five percent of the funds annually appropriated to the Commission on Higher Education for this program may be used for the cost of administering the program. Funds in the account and earnings from it may be carried forward in succeeding fiscal years and used for the purposes of the loan repayment program. The Commission on Higher Education shall review the loan program annually and report to the General Assembly on its progress and results.

(B) Beginning with the 2007-2008 academic year, the loan repayment program established pursuant to this section may not accept new participants. Members of the National Guard who have received loans pursuant to this section before the 2007-2008 academic year may continue to receive their loans, including loans for subsequent academic years, and have their loans forgiven pursuant to the provisions under which the loan program began. Any funds remaining in the loan repayment program, provided for in subsection (A), shall be transferred to the College Assistance Program in accordance with regulations prescribed by the commission.