08/07/2009 05:12 am ET Updated May 25, 2011

Burying Ben Franklin

I know a guy who's got some money. He has come by it more or less honestly and he's worked hard for it, although telling him that would bewilder him. He doesn't think he works hard because work is mostly play for him -- he plays seven days a week, all day long. The dough has always rolled in too -- at least, up until lately, but no worries. He still has his screw-you money and he isn't overwrought (yet) about the economic slowdown.

"But why?" people ask. "Why do you keep on working -- and like a maniac too?"

"Rust never sleeps," he says. He smiles. He sends out e-mails at 4 AM. He plays Neil Young and E. Power Biggs while he reads IPOs and bankruptcy filings.

His family did an intervention on him for workaholicism. By the time he was done with therapy he and his therapist formed an LLC and opened a small chain of rehab centers. It was a great business until insurance companies caught on to what a racket ism-treatment is. Now, they're all Jenny Craig Weight Loss Centers.

Don't get me wrong. I like this guy. But he has more ticks than your Jack Russell Terrier. He buys his suits at a Saint Vincent DePaul thrift store, for one. He picks pennies up off the street, and is fond of saying stuff like "there are no such things as a large whisky and a small amount of money," for two, and three. The tick list goes up into the forties, but I'll stop here. You get the picture.

I don't want to make him sound like Sammy Glick, the Budd Shulberg character in What Makes Sammy Run. Actually, he isn't as complex as Sammy. Mutual business associates think of him more as an idiot savant, or a well-witch: he lays his hands over a business and seems able to divine whether there is any money in it or not. He's only missed a couple of times, and if he's done one deal in the last thirty years, he's done five hundred.

Naturally, people ask him for money. He is not ungenerous, but he hates it when that happens. About twenty years ago he set up an informal little enterprise named the Ben Franklin Loan & Trust as a way to sidestep borrowers. He got the idea from Ben Franklin, of course, who understood that when you loan money to people you do so without any real expectation that you'll get it back -- or that you'll ever see the borrower again. My friend's special spin on Franklin's idea is to refer the borrower to a conventional lender and serve as a co-signer on the note. He doesn't do this for any guy who walks off the street; he has to know and maybe even like the borrower.

The enterprise has performed about as well as Franklin predicted. Eighteen percent of borrowers disappear after making fewer than four payments. Another 6% drop out after a few months but always before 12 months pass. In every case except one they've also disappeared from my friend's life.

Since Barack Obama became President, 60% of the Ben Franklin Loan and Trusts' student loan borrowers are behind 120 days or more. He doesn't blame the President, nor does he hold George Bush responsible: these guys come and go, but the arrogance of Universities and Colleges is eternal. Since 1980 the cost of higher education in the United States has gone up six times faster than the salaries and wages of workers. Obviously, these "teachers" don't give a damn where their money comes from as long as it comes.

My friend never gave much thought to his Ben Franklin project until lately when his hands have filled up with bad paper. There's bad paper for a social worker who owes $85,000, for a dental hygienist who owes $18,000, and bad, bad paper for six other newly educated souls.

"Gee Whiz," my friend says to the collection agents who are calling him. "Why in the world did you loan $85,000 to a social worker who's going to make $35,000 a year -- maybe $60,000 tops at the end of her career?"

"Why did you co-sign for them?" they wryly ask.

My friend tells this story to a group of pals a few days later. "No good turn goes unpunished," one of us says. "Imagine how many student loans have gone south," another intones. "Christ on a bicycle, it's probably a billion dollars!" "You're screwed, Dude," still another says, laughing.

And blue. My friend is depressed by how things are turning out. He realizes how unreflective he has been, and he has suddenly realized how badly people are being served by our institutions. Most of all, he realizes that, even after 30 years of business experience he is, fundamentally, financially illiterate. More to the point, he is sad because the Ben Franklin Loan and Trust is out of business.