How honest should one be with their students when talking about the realities of academia? January seems to be that time of the year that I ponder this question often. After the grades have come out, I always get a few students with very low grades (D or lower) coming to talk to me, and wondering whether this grade will have an impact on their future ambitions of going to a top graduate school and becoming a professor.

Another related event that happens in January is that it's the interview season for tenure-track positions in my field. The market is getting increasingly tougher, and plenty of very strong postdocs that I know don't have any interviews.

Watching these things always makes me wonder if it's a bad thing to be discouraging to the students. 

Sure, technically it's true that even with a couple of failing grades, you can still gain entrance to a top graduate school, given glowing recommendation letters. And sure, I'm sure that some researchers weren't phenomenal in graduate school but they flourish in their later career. 

However, in today's tough market I think that these things are becoming rarer, and in general, unless you stay on top of the track you don't really succeed in becoming a professor/researcher. So I often wonder if it's better to tell the students a bit more of the honest truth. That their ambitions are possible to realize, but that the competition is tougher than they could ever imagine. That they should definitely have a plan B in place. That even if they succeed in becoming a professor, their life might be very different from how they imagined it to be (struggling with a two-body problem, working for a university that you never dreamed of, and so on). I, for one, might have appreciated an honest answer, and maybe that would have changed my career trajectory. And I think enough people with doctorates work for jobs that they could have gotten before going to graduate schools.

So, as an educator, it is bad form to be discouraging. But I wonder if it's actually in their interests to really know what's in store. Do you do this? That is, do you tell your weak students with unrealistic goals that their goals are unachievable?
I am a student so this is coming from a student's perspective.

I think you should be honest with them regarding what going into graduate school entails. For my case, none of the professors I initially talked to encouraged me to go to graduate school, and for good reason. Each of them stated what the cons were to going to graduate school and how the academic job market is now much more competitive than when they were a fresh Ph.D. graduate. Was this discouraging at first? Yes. However, it also helped me in cognitively organizing why I wanted to go to graduate school and I was able to set a firm goal and stick with it.

Those professors often told me that the reason why they would encourage students to take a gap year and think long and hard about the next step is precisely because students often make the assumption that Ph.D. is the obvious 'next step' when it very well might be the exact opposite of what they wanted. 

Coming from a student's perspective, I appreciate honesty from professors because it helps me to realize the reality of going into graduate school and potentially what kind of sacrifices I need to make (e.g. a good chunk of my youth, vacation time, etc.). However, I never found it appealing when a professor, who I aspire to be like, tells me that I'm not good enough to ever do what they do without additional feedback.

In my case, when I first approached those professors about my plans to go into Ph.D. to become a professor, my main advisor looked at my records and told me what to expect, where I currently stand, and what I can do to improve should I wish to stay on that path. I think the last bit is the most important piece of feedback I received. The first two parts can help me in deciding if this is the correct next step for me, but the third part is what will help me achieve that step despite the challenges.

So all in all, if I were one of your students, I would appreciate honest commentary on my goals as well as the additional feedback on what I can do to improve so that the choice of pursuing a Ph.D. is still ultimately my decision. This also helps students to develop and mature, I think.