Sallie Mae, cut off by US, to close 20 offices

Sallie Mae, which employs 8,600, including several hundred at a two-year-old loan center outside Wilmington, "can reduce corporate overhead" by millions "as it consolidates its facilities from 25 sites to possibly less than five," FBR Capital Markets analysts Matt Snowling and Bill Jackson tell clients in a report.

NEW: "About five to seven" sites will stay open, confirmed Sallie spokeswoman Martha Holler when I asked her. "The legislation will force us to reduce our national workforce by 2,500." Company won't say which sites may close.

EARLIER: This follows Congress's narrow approval of a plan to stop giving private companies public subsidies to make student loans with taxpayer money,

The government will now make student loans directly, saving several billion dollars a year. But Sallie Mae's not going away, FBR adds. The Reston, Va.-based company will shave $200 million from expenses "in relatively short order," but it will still make millions from private student loans, and servicing and directing government loans.

The stock, lately trading around $12 a share, is worth $18, given the company's remaining business, plus the likelihood Sallie Mae will take over loans from other student lenders, they say.

Will the Wilmington site survive? Sallie Mae has some local muscle: Ex-MBNA Corp. executive Jack Hewes of West Chester is the company's No. 3 executive, and heads the Wilmington site. Also former First Fidelity Bank boss Tony Terracciano, of South Jersey, is Sallie Mae's board chairman.