Your coworker is a stand-up guy. He took an $800 gamble to help someone out, but he's not an idiot and cut his losses.
I did something like this, on a smaller scale. We'd just moved to a new state and introduced ourselves to the neighbors, and 2 days later the 18ish year old son of one of them, who we had talked to briefly, knocked on the door to borrow $5 for gas for his car to get to his practice with his garage band. I loaned him $10, figuring that would be a good test of whether he was reliable. If so, we could hire him for house sitting, snow shoveling when we traveled, etc.
About 5 months later, I brought it up in conversation, in case he had forgotten (it has happened to me), but he was short of money at the time. About a year after the initial borrowing, he saw me getting out of the car, came over and gave me the $10 with a brief apology for being so late, he had finally gotten a job. So he is not dishonest, just generally irresponsible. It was worth risking $10 to me to find out what a neighbor was like.
Contrast this with a similar situation with a well paid, professional co-worker some years earlier, where I loaned him $40 because he was short of cash, and when I brought it up a couple of months later, he scowled and said "What is the big deal about $40?". I didn't make an issue of it, but learned something useful from that as well. When someone says "What is the big deal about (some amount of money they owe you)", it is typically a big deal to them. I don't recall if he was one of the co-workers who panicked when payroll was late by a couple of days one time due to some kind of software messup. . .