(a) Each LEA may offer interest-free loans to a teacher for the purpose of obtaining a master's or doctoral level degree at any state college or university in the subject area or field of study in which the person teaches or plans to teach in the public elementary or secondary schools of this state.

(b) If the LEA elects to offer interest-free loans as provided in subsection (a), the LEA shall establish an education loan revolving fund from revenues received from gifts, grants and state and local government appropriations made for this purpose and provide the loans from such fund. The legislative body of any county or municipality may appropriate funds for the purpose of establishing such funds for its LEA. No state funds appropriated for education shall be obligated or expended to offer the interest-free loans.

(c) The loans shall be available to any person who has taught in a public elementary or secondary school in this state for at least two (2) years prior to requesting a loan authorized by subsection (a).

(d) The loans shall not be due and payable until the person obtains the degree being sought. Repayment shall be made by applying two thirds (⅔) of any annual salary increase the person receives from the LEA for obtaining the advanced degree. The LEA is authorized to withhold such amounts from the teacher's pay to be applied to the loan repayment until the loan is paid. All funds received for the loan repayment shall be deposited in the education loan revolving fund established pursuant to subsection (b).

(e) If the person obtains a loan under this section and does not continue to teach in the public elementary or secondary schools of this state, the LEA has the option of requiring the loan be paid in full at the time the person is no longer teaching as required in this section or allowing repayment of the loan in an amount that would equal two thirds (⅔) of any annual salary the person would have received from the LEA for obtaining the advanced degree had the person remained in teaching plus any interest that may be due. If the LEA retains the loan, the loan shall begin to accrue interest annually at the formula rate established in § 47-14-102(6) at the time the person is no longer employed as a teacher.

(f) If the person continues to teach in the public elementary or secondary schools of this state but in a different LEA from the LEA that advanced the loan, the appropriate LEAs are authorized to enter into an agreement to withhold the amount established in subsection (d) from the person's salary to be forwarded to the LEA that advanced the loan, to be applied to the loan payment in accordance with subsection (d). In the absence of such agreement, the LEA that authorized the loan is authorized to proceed with collecting the remaining balance due in accordance with the previously established repayment schedule and shall have the authority to enforce the payment of the loan and collect the balance due in the same manner as provided by law for the collection of debts.

(g) The interest free loan program authorized by this section shall be subject to the prior approval of the local school board and the applicable county or municipal legislative body. Nothing in this section shall require the approval of individual loans.