The collapse of the $330 billion auction-rate securities market has brought debt sales by U.S. public student-loan agencies to a halt, Bloomberg reported.

No municipal bonds backed by student loans were sold in the first quarter, the first time that has happened in almost 40 years, according to Thomson Financial. The inability to obtain financing differs from states, cities, schools and hospitals, which sold $82 billion of bonds to fund public works and replace failed auction debt that stuck them with penalty rates as high as 20 percent.

Since mid-February, when Wall Street firms that supported the auction-rate bond market for more than 20 years stopped buying securities investors didn’t want, almost all of the debt has failed to find buyers, according to data compiled by Bloomberg.

Without the ability to finance, public authorities in Michigan, Missouri, New Hampshire, Texas, Pennsylvania and Iowa have suspended or limited their origination of loans, according to an April 1 report from UBS AG.

Of the top 10 largest issuers of auction-rate debt among municipal issuers tracked by Thomson from 2000 through 2007, half were student lenders.

Auction-rate securities backed by student loans made up about $86 billion of the $330 billion market at the beginning of the year, according to Moody’s Investors Service. The market faltered in February, after dealers stopped acting as buyers of last resort when investor demand flagged.

On April 2, 115 tranches of student-loan bonds came up for auction and 114 failed, based on data compiled by Bloomberg from four major auction agents. The same day, there were 353 failed auctions, or 63 percent, involving 563 municipal issues. Almost all auction-rate securities issued by closed-end mutual funds also failed.