At college age, people are much more capable of making their own decisions, and their actual capabilities and weaknesses have also become clearer and more stable. And it's not like going to a Fachhochschule is going to set someone up for a hard life as being assigned to a Hauptschule pretty much does.
In fact, that's what a lot of people like about college and it's why you see college described as a "place to experiment".
> their actual capabilities and weaknesses have also become clearer and more stable
Also not so sure about this. I've met MANY people who went in 99% sure of college major A but after a few classes and an internship they found out they suck at it/hate it.
Also, at that age, your ability to learn climbs very high just as function of age.
As long as the middle gets sorted into the Realschule, there's no problem ;-) But more seriously, according to wikipedia[0] IQ is relatively stable beginning at an age of approx. 11 years, so if we compensate for the measurement error with a permeable system I only see two problems: As you mentioned, at this age the brain devolops so rapidly that being the oldest in the class gives students a measurable advantage, but that is an issue for any school system, and as I said in a neighboring comment, overly ambitions parents are meddling too much, but that is a relatively recent phenomenon and a problem unto itself.
More to the point: you can't in one breath say "I know the difficulties surrounding IQ" and in the next say "any source I cite about IQ must represent settled science". One or the other of those statements must not be true.
[0] Deary, I. J., Whalley, L. J., Lemmon, H., Crawford, J. R., & Starr, J. M. (2000). The stability of individual differences in mental ability from childhood to old age: Follow-up of the 1932 Scottish mental survey. Intelligence, 28, 49 -55
There is a lot more then IQ that goes into grades. All of it happens before 10.
What would it add that the choice of university and major doesn't? The math kids at MIT aren't so different from each other.
For most people I talked to, the idea of sending their son or daughter to college (even a local one) was a risk and rarely considered. If all they want is their kid to graduate high school, they're not going to have the same approach to education as the $100k family with the opposite thought (they HAVE to go to college).
[1] I made up this phrase to mean immigrant families who have been in the US for a few generations but have not assimilated to American middle class culture.
From my experience in the US, high schools are about 4-5x the size of German schools. That allows for flexible curricular within one school, where you can get into the advanced Calculus class but take it easier with foreign languages, and, most important do sports etc, with everyone.
It really doesn't seem useful to sort people along a linear scale at 10 years of age, especially considering that empirically, the single most important factor for that decision is the parents' ambition.
The US' biggest flaw is quality differences between schools. I can't get my head around the idea that school finances heavily depend on the immediate neighbourhood they're serving. That's both morally bankrupt and severely shortsighted. The larger schools also double or triple the average commute, costing US students an hour per day, strengthening reliance on cars and making social life harder than it needs to be.