(a) Any obligation of a participant for service or payment to the federal government under this part will be canceled upon the death of the participant.

(b) The Director may waive or suspend any service or payment obligation incurred by the participant upon request whenever compliance by the participant:

(1) Is impossible, or

(2)(i) Would involve extreme hardship, and

(ii) If enforcement of the service or payment obligation would be unconscionable, as required by section 487 D(e) of the Act, 42 U.S.C. 288-4(e).

(c) The Director may approve a request for a suspension of the service or payment obligations for a period of one year. A renewal of this suspension may also be granted.

(d) Compliance by a participant with a service or payment obligation will be considered impossible if the Director determines, on the basis of information and documentation as may be required, that the participant suffers from a physical or mental disability resulting in the permanent inability of the participant to perform the service or other activities that would be necessary to comply with the obligation.

(e) In determining whether to waive or suspend any or all of the service or payment obligations of a participant as imposing an undue hardship and being against equity and good conscience, the Director, on the basis of information and documentation as may be required, will consider:

(1) The participant's present financial resources and obligations;

(2) The participant's estimated future financial resources and obligations; and

(3) The extent to which the participant has problems of a personal nature, such as physical or mental disability or terminal illness in the immediate family, which so intrude on the participant's present and future ability to perform as to raise a presumption that the individual will be unable to begin or complete the obligation incurred.