WASHINGTON - With federal and state college loan programs reeling from the credit crunch caused by the subprime mortgage crisis, state officials are worried about what will happen this summer when a surge of students begins applying for fall semester money.

An increasing number of banks, private lenders and state agencies are dropping their student loan programs, forcing students to scramble for new sources of money. While some experts say students should be able to easily find new lenders, students who switch could end up with higher interest rates and fewer benefits, such as paid upfront loan fees, as the financial market tightens.

And some experts worry that escalating loan costs could discourage some students from applying at all.

In a time of what loan officials say is unprecedented uncertainty, students asking about whether certain loans are available are getting answers like, "As of today, yes."

Among the skittish lenders are state loan programs run by state agencies or nonprofit lending groups. These agencies have traditionally offered loans with better benefits than their for-profit counterparts, but some have stopped offering federal loans, cutting off a main source of tuition money to hundreds of thousands of students. This year, for example, about 14,700 students in Massachusetts and 500,000 in Pennsylvania received these loans, but both states have suspended their programs.

This month, Kentucky announced that unless more money becomes available, it will not accept loan applications from new students after May 1, closing the door on 27,500 potential borrowers.

Other states have suspended their private loans, which will leave 20,000 students in Iowa, for example, looking elsewhere for money.

There are two types of student loans: federal loans, which are funded by lenders but guaranteed by the federal government, and private loans. To raise money for both types of loans, lenders, including state agencies, float bonds, but wary investors are staying away from all markets, including those for traditionally safe student loans.

There has not been one successful bond auction for new student loans since last year. As a result, eight states have either suspended their private loan programs or pulled out of the federal loan program - three of them just last week.

Since mid-February, agencies in Massachusetts, Minnesota, Pennsylvania and Texas have announced they will stop offering federal loans. In addition to Iowa, lending groups for Missouri and New Hampshire have suspended their private loan programs. Michigan has dropped both types of loans.

Private loans offered by some states help students cover what the capped federal loans don't, and they offer better benefits for less costly fees. The suspensions of some state private loans mean that the 8,500 Michigan students who this year received the MI-LOAN and the 6,160 students in New Hampshire who borrowed almost $8,000 each from the state's loan program will be out of luck if they re-apply.

"That's 6,000 students in New Hampshire who are in the middle of finals, getting letters from schools, who are going to have to make adjustments," said Tara Payne, spokeswoman for the New Hampshire Higher Education Loan Corp., which announced last month it was suspending its alternative loan program.

"What we hope is that the cost to borrow for students isn't so high that they decide it isn't worth it," Payne said.

More students depend on the state agencies to give them federal loans. Nationwide, 11.3 percent of students receive federal loans through state agencies; the rest of the loan money is largely dispersed by banks, directly by the federal government and by other private lenders.

The federally guaranteed loans come through the Federal Family Education Loan Program. But since the fall, more than 50 lenders - both for-profit lenders such as banks and nonprofit lenders like state agencies - have dropped out of FFELP or scaled back participation. The departing lenders represent 13.6 percent of the current loan pool.

The U.S. House this month overwhelmingly passed a bill clarifying that the U.S. education secretary has the authority to advance money to lenders of last resort in the event every lender drops out of the federal program, and buy up loans that lenders have been unable to sell to investors to give them money to make new loans. The Bush administration sent a letter to key congressional members on April 23 supporting the provisions and encouraging the Senate to expedite approval of its own bill.

But critics say the federal government needs to pump even more money into the system. If not, "I would expect to see many more lenders leaving the student loan program by the end of the 2008-09 year," said Mark Kantrowitz, the founder of FinAid.org, a financial-aid Web site.

Adding to the uncertainly, colleges - and students - can be caught off guard by these sometimes sudden departures. Just two weeks before TCF Bank, one of the 50 largest student loan providers, announced March 20 that it was dropping out of FFELP, the bank sent a letter touting its student loan benefits to Michigan State University's financial aid office.

"If we had been doing business with them, recommending them, we would have to go and undo everything we had done and help students and parents start all over again," said Rick Shipman, the school's financial aid director. "My concern is how much time and energy it will take to identify lenders that are participating in the program, and bring that information to students when they need to have it."

Lenders, both private and state, have also suffered from a federal law enacted last year which cut subsidies and increased their financial risks and fees, and resulted in a cut in profits.

In recent weeks, large lenders like Sallie Mae and Citigroup announced they were cutting benefits and suspending federal loan consolidations, or the combination of two or more loans into a single loan; Citigroup also said it would make loans at colleges only if it deemed such loans profitable. Bank of America Student Lending has suspended all private loans.

Another two states could soon join the five that have already left the federal program. The Arkansas Student Loan Authority announced last week that it might not have enough money to offer loans for the next school year. Lack of money also led the Kentucky Higher Education Student Loan Corp. to announce it will not accept applications for federal loans from new students after May 1. The agency, which usually receives about 27,500 new applications a year, distributes 70 percent of federal loans in the state, spokeswoman Jo Carole Ellis said.

Asked if she thought the students would be able to find new lenders, Ellis said: "That's the big question - we don't know. We do not know to what extent other lenders will step up to the plate. ... If the other 30 percent (of lenders) double their volume, that still does not cover the whole market."

Other state agencies say students should be able to easily find new lenders for loans. So far, experts say, no student has been unable to get a federal loan, and though more than 50 lenders have dropped out, FFELP has more than 2,000 more.

Some experts say the problem is being blown out of proportion; they say these 2,000 lenders remaining in FFELP will pick up the business abandoned by other lenders and that, at worst, students have another layer of hassle by having to find new lenders.

"People should not be worried about their ability to get a loan to pay for college," said Robert Shireman, executive director of the Project on Student Debt, an advocacy group pushing for affordable loans. "They should be aware that the lender they used last year might not be making loans this coming year, so they may need to choose a new lender ... but they are not going to see the rug pulled out from under them."

(Disclosure: One funder of the Project on Student Debt is The Pew Charitable Trusts, which also funds Stateline.org, the producer of this report.)