Unpaid internships can't involve the intern doing work for the benefit of the employer, which is what he's offering. Here's the six criteria test for unpaid internships from the Department of Labor:

http://www.dol.gov/whd/regs/compliance/whdfs71.pdf

Virtually all internships in tech are paid internships. Colleges that run coop programs give credits for internships in addition to the students getting paid: it's sold to them as a way to help pay their college costs while getting work experience before graduating. An employer can't pay you in college credits.

I already graduated college, but i have thought of that aswell.