Washington — Sallie Mae, which last week announced that it would stop making federal consolidation loans, warned today that it may not have enough money to meet students’ growing demand for Stafford loans either.

Testifying before the Senate banking committee, John F. Remondi, Sallie Mae’s vice chairman and chief financial officer, said applications for guaranteed student loans were up 26 percent this year, largely because of the departure of nearly 50 other lenders from the program. But he warned that it would be hard for Sallie Mae to continue to fill the gap if the government did not act to restore liquidity to the credit markets and to reduce lenders’ cost of capital.

“The question is, How long do we continue to lend at a loss?,” he said, asserting that every loan financed through the asset-backed securities market today costs the lender money.

So far, it does not appear that any students have been denied loans as a result of the lender departures. But as the student-lending season kicks into high gear, and the credit crunch continues, lenders and some colleges are growing concerned that some students may have a harder time obtaining loans this fall.

During the hearing, Mr. Remondi called on the Bush administration to authorize the Treasury Department’s Federal Financing Bank to invest in securities backed by student loans. Such a step, Mr. Remondi said, would send “a signal to the market that the government stands behind this guaranteed asset” and would “hasten a return of investors to this asset class.”

The proposal is similar to legislation, offered last week by Rep. Paul E. Kanjorski of Pennsylvania and Sen. John Kerry of Massachusetts, that would allow banks participating in the Federal Home Loan Bank System to invest in student-loan-related securities. Both plans aim to free up capital for student lenders, which have had a harder time obtaining financing in the securities markets.

But Mr. Remondi said that the Federal Financing Bank would be a better vehicle because the bank is already authorized to purchase and sell securities that are guaranteed by federal agencies. The proposal, therefore, would not require legislative action. —Kelly Field