The degree to which you are rubbing shoulders with real German people or students will depend a great deal on the type of study abroad program you select.
Some study abroad programs, especially short-term ones (e.g., summer and winter programs) are designed specifically for North American study abroad students. They may be taught by faculty from U.S. universities taking a group of students overseas. This type of program, known as an “island program,” attempts to replicate the U.S. classroom in a foreign setting, taking advantage of the site to reinforce the content of the class. Students are in class together and live together. An example of this might be a four-week intensive summer program covering the basics of alternative energy production, taught by a U.S. professor, which visited wind turbine factories and biomass facilities in Germany.
Alternatively, a “direct enrollment” program places study abroad students in the German classroom with degree-seeking German students, taught by German faculty. Study abroad students do the same academic work as their German counterparts. Students are integrated in local housing with German and other international students. Examples include the Frankfurt Exchange and the Dortmund Exchange.
Some study abroad programs offer a blend of both program models. For example, all study abroad students might be required to take one or two classes offered by the program (e.g., “German Cultural History,” or perhaps an intensive German language class offered at various levels), often taught by local German faculty who have experience working with American students. Then students have the option of taking some direct-enrollment classes at a local university, or undertaking an internship. This type of program, known as a “hybrid,” helps students ease into the German academic system and provides a great deal of academic support. An example is the Academic Year in Freiburg program.
Finally, a distinction should be made between "exchange programs" and regular "study abroad programs." Exchange programs are virtually all direct-enrollment programs at foreign univesities with which the University of Iowa has an exchange agreement, whereby we agree to exchange students on a one-for-one basis. UI students pay tuition and fees here (and depending on the particular exchange program, may also pay for a dormitory and meal contract), then study abroad at our partner institution with no further charges. In other words, the cost of attendance is the same abroad as it is in Iowa City (more or less -- transportation and the cost of living will increase the costs a bit). A study abroad program, on the other hand, is a "one-way street." The University of Iowa has a contractual agreement with a foreign university to send students abroad. Because we send a volume of students, there is usually a tuition break to pass along. But the cost of a study abroad program is usually more than the price of UI tuition and fees, if you an Iowa resident. If you are a non-resident, a regular study abroad program may cost more-or-less the same as it does for you to study in Iowa City.
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Students considering study abroad should ask themselves what level of cultural immersion they might be comfortable with. No one model is appropriate for everyone. Generally speaking, it is the philosophy of Study Abroad to encourage as much immersion in the host culture as possible while studying abroad, but this can be done in many ways. For example, a student on an “island” program might seek out ways to get involved in the local community through volunteer work, or joining clubs or sports teams. A student on a hybrid program could do likewise, and also strive to take as many "direct enrollment" courses at the local university as possible.