1. Every student receiving scholarships under the provisions of sections 161.415 to 161.424 shall teach in an elementary or secondary public school in this state for a period of five years after receiving a degree or the scholarship shall be treated as a loan to the student and interest at the rate of nine and one-half percent per year shall be charged upon the unpaid balance of the amount received from the date the student ceases to teach until the amount received is paid back to the state. For each year that the student teaches up to five years, one-fifth of the amount which was received under sections 161.415 to 161.424 shall be applied against the total amount received and shall not be subject to the repayment requirement of this section.
2. The department of higher education and workforce development shall have the power to and shall defer interest and principal payments under certain circumstances, which shall include, but need not be limited to, the enrollment in a graduate program, service in any branch of the Armed Forces of the United States, or teaching in areas of critical need as defined by the state board of education.