I think the issue is that since the loans are not secured loans (and you are paying a premium for that), many of the people who take them out are just not in a position to afford them. And often the parent expects the student to pay them off in addition to any subsidized loans.
So I don’t think it is a situation of a parent saying we can pay in full, but maybe it makes sense to take out a loan since we can use our money in a different way in terms of investing.