What are your thoughts?"

Oh, this old chestnut again! A new edition and it rears its head up to bedevil new players. 

Level drain officially doesn't exist in 5th edition. This is the replacement: 

"The target's hit point maximum is reduced by an amount equal to the necrotic damage taken, and the creature regains hit points equal to that amount. The reduction lasts until the target finishes a long rest. The target dies if this effect reduces its hit point maximum to 0."

People don't like level drain. It isn't fair. It takes away something that took weeks (or longer) to earn.

That is the point!

You aren't supposed to like it. You aren't supposed to get rid of it with a long rest or a spell. You are supposed to stop and say "That creature is terrifying!" and really not like what it can do to you.

Of course, modern players and their ideas of what's "fair" and not wanting to have anything bad happen to them may create a situation where your milage may be fluctuating independently of my experience.

Being that this is 5th edition, I would have each hit drain 2d4x500 experience. I would not reduce the experience level (with death at 0 experience), I would just require them to earn back the experience before they could continue gaining experience. The reason for this is twofold.

• First, very little actually happens when you gain a level in 5th edition. In general, unless it's a threshold level (5, 10, etc.) Your to hit bonus isn't going to change, your hit points are going to differ only slightly, and you'll lose a class feature or two. It is simultaneously difficult to track and not globally significant. (Yes, on a stat gain level, it might increase your chance to hit and strength checks and some such, but whatever the penalty is, isn't usually global, even if it is a little important for a subsystem like combat.)
• In summation, the complexity far outweighs the benefit of tracking the reduction in level, unless that level is a threshold level, and even in that case it's better to be consistent.
• They still lose the experience, putting them that much father from the next level. This is a painful enough consequence that it will make them seriously consider the strength of your opponent.