I am not a laywer, nor have I been to college (so no student loans):
A hen in your hand is worth two in the bush, as the saying goes. $3420 would probably be very useful to you just out of college. If you can, I'd recommend putting the entire chunk of it to pay off part of your student loans, which over the course of the next several years, would probably save you an additional $500 in interest (free money. Or rather, free interest you no longer have to pay). Plus you'd pay off your loan several months sooner, which would probably feel very good.
In a year, the project could've been canceled and you'd end up with $0. Get it in writing that you get your $3500, whether the project sees completion or not. Get monthly payments for it, so even if the whole thing goes bottom-up, you still have whatever you already managed to get. If you don't get paid, refuse to give anyone permission to use your artwork and concepts.
I wouldn't be confident that the net earnings would top $100,000 either, simply because most games don't make that - but I haven't seen the game.
On the other hand, you've made the artwork for fun and for educational purposes. If you get even $100 for it, that's a plus.
If that game suddenly makes a million bucks, good for them! But do you want $3500, or a lottery ticket? If you want to really hedge your bets, write on a piece of paper a plain-english agreement:
I, <blah>, get $3500, paid over the next seven months in chunks of $500 starting April 2013. If the game makes over $100,000, then I get 3%, otherwise I only get the $3500 previously mentioned. In exchange, I give <otherperson> the non-exclusive rights to use <specific artwork and specific assets> in <specific game>. If <otherperson> fails to release the finished game project within two years, the rights to that artwork is returns to me.
Signed: ________(me) __________ (him) on __________ (date),
Witnessed by __________ (witness A) ___________ (witness B)
Again, I'm not a laywer, nor do I run a business - I'm just a hobbyist trying to go indie. I'd take the $3500 today over a promise of $6000 tomorrow, unless the person has a track record or I can see for myself the likelihood of that person really significantly succeeding.
Ofcourse there's the issue of the friendship as well. Is the friendship more valuable to you than the $3500? Then you aren't going to sue him if he doesn't pay, and also you might want to avoid discouraging him by saying or implying that you think he will fail.