The American State Department has withdrawn all Fulbright grants to Palestinian students in Gaza hoping to pursue advanced degrees at American institutions this fall because Israel has not granted them permission to leave.

Israel has isolated this coastal strip, which is run by the militant group Hamas. Given that policy, the United States Consulate in Jerusalem said the grant money had been “redirected” to students elsewhere out of concern that it would go to waste if the Palestinian students were forced to remain in Gaza.

A letter was sent by e-mail to the students on Thursday telling them of the cancellation. Abdulrahman Abdullah, 30, who had been hoping to study for an M.B.A. at one of several American universities on his Fulbright, was in shock when he read it.

“If we are talking about peace and mutual understanding, it means investing in people who will later contribute to Palestinian society,” he said. “I am against Hamas. Their acts and policies are wrong. Israel talks about a Palestinian state. But who will build that state if we can get no training?”

Some Israeli lawmakers, who held a hearing on the issue of student movement out of Gaza on Wednesday, expressed anger that their government was failing to promote educational and civil development in a future Palestine given the hundreds of students who had been offered grants by the United States and other Western governments.

“This could be interpreted as collective punishment,” complained Rabbi Michael Melchior, chairman of the Parliament’s education committee, during the hearing. “This policy is not in keeping with international standards or with the moral standards of Jews, who have been subjected to the deprivation of higher education in the past. Even in war, there are rules.” Rabbi Melchior is from the Meimad Party, allied with Labor.

The committee asked the government and military to reconsider the policy and get back to it within two weeks. But even if the policy is changed, the seven Fulbright grantees in Gaza are out of luck for this year. Their letters urged them to reapply next year.

Israel’s policy appears to be in flux. At the parliamentary hearing on Wednesday, a Defense Ministry official recalled that the cabinet had declared Gaza “hostile territory” and decided that the safety of Israeli soldiers and civilians at or near the border should be risked only to facilitate the movement out of Gaza for humanitarian concerns, like medical treatment. Higher education, he said, was not a humanitarian concern.

But when a query about the canceled Fulbrights was made to the prime minister’s office on Thursday, senior officials expressed surprise. They said they did, in fact, consider study abroad to be a humanitarian necessity and that when cases were appealed to them, they would facilitate them.

They suggested that American officials never brought the Fulbright cases to their attention. The State Department and American officials in Israel refused to discuss the matter. But the failure to persuade the Israelis may have stemmed from longstanding tensions between the consulate in Jerusalem, which handles Palestinian affairs, and the embassy in Tel Aviv, which manages relations with the Israeli government.

The study grants notwithstanding, the Israeli officials argued that the policy of isolating Gaza was working, that Palestinians here were starting to lose faith in Hamas’s ability to rule because of the hardships of life.

Since Hamas, a radical Islamist group that opposes Israel’s existence, carried out what amounted to a coup d’état in Gaza against the more secular Fatah party a year ago, hundreds of rockets and mortar shells have been launched from here at Israeli civilians, truck and car bombs have gone off and numerous attempts to kidnap Israeli soldiers have taken place.

While Hamas says the attacks are in response to Israeli military incursions into Gaza, it also says it will never recognize Israel.

“We are using the rockets to shake the conscience of the world about Israeli aggression,” argued Ahmed Yusef, political adviser to the Hamas foreign minister in an interview in his office here. “All our rockets are a reaction to Israeli aggression.”

The Israeli closing of Gaza has added markedly to the difficulty of daily life here, with long lines for cooking gas and a sense across the population of being under siege. Israel does send in about 70 truckloads per day of wheat, dairy products and medical equipment as well as some fuel, and it permits some medical cases out.

But Israel’s stated goal is to support moderates among the Palestinians so that Hamas will lose power, and even some security-conscious Israeli hard-liners say that the policy of barring students with grants abroad is counterproductive.

“We correctly complain that the Palestinian Authority is not building civil society, but when we don’t help build civil society this plays into the hands of Hamas,” said Natan Sharansky, a former government official. “The Fulbright is administered independently, and people are chosen for it due to their talents.”

The State Department Web site describes the Fulbright, the American government’s flagship program in international educational exchange, as “an integral part of U.S. foreign relations.” It adds, “the Fulbright Program creates a context to provide a better understanding of U.S. views and values, promotes more effective binational cooperation and nurtures open-minded, thoughtful leaders, both in the U.S. and abroad, who can work together to address common concerns.”

Sari Bashi, who directs Gisha, an Israeli organization devoted to monitoring and increasing the free movement of Palestinians, said, “The fact that the U.S. cannot even get taxpayer-funded Fulbright students out of Gaza demonstrates the injustice and short-sightedness of a closure policy that arbitrarily traps 1.5 million people, including hundreds of Palestinian students accepted to universities abroad.” She said that their education was good not just for Palestinian society, but for Israel as well.

Some Israelis disagree strongly.

“We are fighting the regime in Gaza that does its utmost to kill our citizens and destroy our schools and our colleges,” said Yuval Steinitz, a lawmaker from the opposition Likud Party. “So I don’t think we should allow students from Gaza to go anywhere. Gaza is under siege, and rightly so, and it is up to the Gazans to change the regime or its behavior.”

Hadeel Abukwaik, a 23-year-old engineering software instructor in Gaza, had hoped to do graduate work in the United States this fall on the Fulbright that she thought was hers. She had stayed in Gaza this past winter when its metal border fence was destroyed and tens of thousands of Gazans poured into Egypt, including her sister, because the agency administering the Fulbright told her she would get the grant only if she stayed put. She lives alone in Gaza where she was sent to study because the cost is low; her parents, Palestinian refugees, live in Dubai.

“I stayed to get my scholarship,” she said. “Now I am desperate.”

She, like her six colleagues, was in disbelief. Mr. Abdullah, who called the consulate in Jerusalem for further explanation after receiving his letter, said to the official on the other end, “I still cannot believe that the American administration is not able to convince the Israelis to let seven Palestinians out of Gaza.”

Taghreed el-Khodary contributed reporting.