(a) Each applicant before being granted a loan or scholarship shall enter into a contract with the State of Georgia agreeing to the terms and conditions upon which the loan or scholarship is granted, which contract shall include such terms and provisions as will carry out the full purpose and intent of this part. The form of such contract shall be prepared and approved by the Attorney General, and each contract shall be signed by the chairman of the State Medical Education Board, countersigned by the executive director of the State Medical Education Board, and shall be signed by the applicant. For the purposes of this part the disabilities of minority of all applicants granted loans or scholarships pursuant to this part are removed, and the said applicants are declared to be of full lawful age for the purpose of entering into the contract provided for in this Code section and such contract so executed by an applicant is declared to be a valid and binding contract the same as though the said applicant were of the full age of majority. The State Medical Education Board is vested with full and complete authority to bring an action in its own name against any applicant for any balance due the State Medical Education Board on any such contract.

(b) An applicant who has entered into a loan or scholarship contract with the State Medical Education Board and who:

(1) Is dismissed for either academic or disciplinary reasons from the college or school of medicine he is attending; or

(2) Voluntarily terminates his training and education in that institution for any reason prior to completion of training

shall be immediately liable to the State Medical Education Board for all sums advanced with interest at the minimum rate of 12 percent per annum from the date of each payment by the State Medical Education Board and compounded annually to the date the scholarship or loan is paid in full. The State Medical Education Board is authorized to increase annually said rate of interest due on loans granted to new recipients; provided, however, that the increased rate of interest shall not exceed by more than 2 percent the prime rate published by the Board of Governors of the Federal Reserve System and in effect at the time of the increase.

(c) An applicant who has entered into a loan or scholarship contract with the State Medical Education Board and who breaches that contract by either failing to begin or failing to complete his service obligation under such loan or scholarship contract shall be immediately liable to the State Medical Education Board for three times the total uncredited amount of all such scholarship or loan payments paid to the applicant, such uncredited sums to be prorated on a monthly basis respecting the applicant's actual service and total service obligation. The State Medical Education Board may consent or agree to a lesser measure of damages for compelling reasons.

(d) The State Medical Education Board shall have the authority to cancel the loan or scholarship contract of any applicant at any time for any cause deemed sufficient by the State Medical Education Board, provided that such authority may not be arbitrarily or unreasonably exercised. Upon such cancellation by the State Medical Education Board, the total uncredited amount of the scholarship paid to the applicant shall at once become due and payable to the State Medical Education Board in cash with interest at the minimum rate of 12 percent per annum from the date of each payment by the State Medical Education Board and compounded annually to the date the scholarship or loan is paid in full. The State Medical Education Board is authorized to increase annually such rate of interest, subject to the limitations set forth in subsection (b) of this Code section.