The acting chief of Pennsylvania’s student-loan agency told state legislators on Tuesday that his agency would temporarily stop making new loans through the federal guaranteed-student-loan program, the Associated Press reported.

James L. Preston, acting president of the Pennsylvania Higher Education Assistance Agency, or Pheaa, said the agency had decided two weeks ago to suspend loans made outside the state, and now had decided also to suspend in-state loans, effective March 7.

The decisions stem from a credit crunch that has created turmoil in the bond markets. “Right now, it’s not profitable for us at all to finance” federal student loans, Mr. Preston told state lawmakers in Harrisburg, Pa., during a hearing on Pheaa’s budget. Instead, he said, the agency will steer prospective borrowers to banks that are still participating in the federal program.

A number of student-loan companies, including the College Loan Corporation, Nelnet Inc., and Sallie Mae, have either left the federal program or scaled back the types of loans they offer. In those decisions, lenders have cited both the credit crisis and cuts in the federal subsidies paid to lenders in the government-backed program. In addition to those problems, Pheaa is contesting a decision by the U.S. Department of Education that it should repay $15-million in subsidies it received in the past. —Charles Huckabee