This is provably impossible in the general case [1] and almost impossible in his specific case. It's extremely difficult to know if/when a program will terminate using just static analysis.

Edit: Why the down vote?

[1] http://en.wikipedia.org/wiki/Halting_problem

This sounds like a bad idea, but it's actually very reasonable. Students, especially in early courses, are generally taught a subset of the language that wouldn't be that difficult to check for halting. As a bonus, you could also have that program analyze asymptotic bounds to help with grading.

Still, this isn't the easy solution. The easy solution is to use a process and terminate it if it takes too long. Threads can't be reliably terminated, and especially not without accidentally ruining internal state. (what happens with locks? etc.)