You’re right, but I bet there’s a sorta defensible position by the parent—they’re footing a massive college education bill so their kid doesn’t go into debt.
Nope, still not a reason. The way you handle it, is you have the kid take out the loan. Then you pay off the amount if the semester was successfully completed. This provides them freedom and autonomy to learn and be responsible. It also provides them with credit history.
Usually universities mandate a "parental contribution" - but the idea of having the student borrow the money and immediately pay it back is interesting.
I wonder if the student would be able to get such a loan?
At least what I've seen in the US, there's no requirement for a parental contribution. There are some loans that require disclosure of parental assets to determine eligibility.