The bank wants their money regardless of how much you earn. With this scheme, if you don't earn anything you don't pay anything and when you do pay it is always a managable amount. This sort of arrangement could be very handy for a programmer-mendicant or compulsive volunteer.

Or a a nefarious person. Upstart deal sounds too good. With some Hollywood accounting, you might even be able to skip paying them anything.

This happened in the 90s with the Hope Scholarship, which failed for the obvious reasons.

The HOPE scholarship, if you're referring to the one in Georgia (http://en.wikipedia.org/wiki/HOPE_Scholarship) is still alive. I went to school, getting full tuition plus a book and fee stipend for my undergraduate degree. Eligibility became more difficult sometime after I graduated, but it's still around.

That can't be it; there's nothing in there about repayment or treating the loan as equity rather than debt.

Student loans are way too low, on virtue of the smaller returns, some people may prefer a little comfort than living on Ramen noodles for 4 years.