(1) If a recipient of a loan or grant fails to meet a condition of the loan or grant, the department shall notify the recipient in writing.

(2) The council shall consider the reported default at a regularly scheduled quarterly meeting and consider whether to:

(a) grant requests for forgiveness made pursuant to ARM 4.16.512;

(b) forgive performance of a grant obligation;

(c) defer performance obligations;

(d) modify the loan or grant agreement;

(e) convert a grant to a loan;

(f) convert a loan or grant to the default interest rate; or

(g) take other action not inconsistent with statute or rule.