the Department, utilizing a form designed by the Secretary, of the student's compliance or noncompliance with subparagraph (A) annually until such student completes the student's work obligation. (C) Deferment for graduate school The work obligation described in subparagraph (A) of an eligible student awarded a grant under this section who enrolls as a full-time student in a post-baccalaureate degree program not later than 3 years after the date the student receives the student's baccalaureate degree shall be deferred during the period of such full-time enrollment. Any years of service completed prior to full-time enrollment in a post-baccalaureate degree program shall count toward such work obligation. (4) Repayment for noncompliance In the event that an eligible student awarded a grant under this section fails or refuses to comply with the work obligation as described in paragraph (3), or the student does not receive a baccalaureate degree after the second academic year for which the student received the grant, as described in paragraph (2)(B), the sum of the amounts of any grants received by the student shall, upon a determination of such a failure or refusal in such service obligation or failure to meet satisfactory academic progress, be treated as a Federal Direct Unsubsidized Stafford Loan under part D of title IV, and shall be subject to repayment, together with interest thereon accruing from the date of the grant award, in accordance with terms and conditions specified by the Secretary in regulations under this section. (5) Medical exemption The Secretary may grant an eligible student awarded a grant under this section a medical exemption— (A) from the requirement of maintaining satisfactory academic progress under paragraph (1)(A)(ii)