In the long run, you are right, paying off the loans would save lots of money, especially if it's a high interest rate like a credit card account. The problem with your reasoning is that the long run only matters if you survive the short term issues you are facing.
Paying off debt now, then being unable to secure a loan later if they can't get a new loan would likely end up causing financial ruin. They might be forced to declare bankruptcy, lose nearly everything, and face sky high interest rates for years as they rebuild their credit.
Oh, and the bombed out credit score will also make it difficult for him to get a job, since many employers check credit scores these days before hiring.