> Well, now that I think about it I also undervalued myself and almost didn't apply to university thinking that I would not get accepted.
Between that sentence and the rest of your comment, I think you're still seriously undervaluing yourself.
> I think that you are right in that I should work on a visible Open Source project, even if only contributing in small bugs and documentation. Eventually, and with at least some projects under my belt I hope I can land a small position somewhere.
Small bugs and documentation are a good start. You should also consider working on a more substantial feature, the kind of thing that will take you weeks or more to complete. Something of the size that you can point to that project and that feature and say "I did that".
Pick a project you regularly use, that has a friendly and welcoming community around it. Learn how to build it from source, try a couple of very small patches at first (much easier for a project that has a very new-developer-friendly community), and then seek out a substantial project to work on. Most projects have a wishlist of items that they'd work on if they had more time.
> Yet, I don't feel exploited at all because the money issue was discussed with me in an upfront manner and I have not done any amount of work yet. And besides, it is a position that offers experience that I can put later on my CV and potentially eventually it will lead to a paying job.
They're not being underhanded in the sense of bait-and-switch; they've certainly told you up front. However, what they're not telling you is how the rest of the market would value your skills. Internships in CS, as a general rule, are paid, and reasonably well at that; certainly far above minimum wage. Go look up intern salaries at major companies. Ask around and find out what other students have done. (And I don't just mean at your own university, or even in your own country.)
(Depending on the nature of the arrangement, I'd also be surprised that they're not in some way violating labor laws by having you work for free, but that's not an avenue you want to pursue.)
> So in a sense, isn't it riskier to not accept this offer?
> I dunno, I still have some doubts...
You have a year left in school, and you have your whole life ahead of you. Don't set the precedent of being willing to work for free. And after you do graduate, do some reading about negotiation before you accept your first job offer. If you go into either an internship or your first job with the stance you're taking now, you're going to spend your whole career being underpaid.