You are a student, which means your schoolwork is your priority, and your boss should understand that. Just be honest and explain that you have a very tough semester coming up, and you don't think you will be able to devote all of the time he wants. Perhaps you might be willing to accept if he understands that you will need a flexible schedule and might need to drop hours as the semester goes on. There shouldn't be any hard feelings or burned bridges. Interns will go back to school - that's how they work.

You'll notice that I didn't include anything about asking for a higher pay. I think this would be a bad idea. Not because it would look bad to your boss, but because you should be considering whether you can do the internship based on time commitment, not pay grade. If your boss agrees to pay you more, you will feel obligated to spend more time and energy at the internship, possibly at the expense of your research and coursework. You are taking "some of the hardest courses in our curriculum", and those types of classes are often more time-consuming than you initially thought.

First determine whether you have the ability to work part-time and still do well in your classes. If you are absolutely certain you can pull it off, then you can consider whether you want that pay raise or not. Again, honesty is your best policy here. Just explain that you have a very full semester already, and you need to a raise to make the internship worth spending your already limited time and energy. I would still certainly press for flexible hours, since exams and projects can be hard to plan for in advance.

You are a student, which means your schoolwork is your priority, and your boss should understand that. Just be honest and explain that you have a very tough semester coming up, and you don't think you will be able to devote all of the time he wants. There shouldn't be any hard feelings or burned bridges. Interns will go back to school - that's how they work.

Perhaps you might be willing to accept if he understands that you will need a flexible schedule and might need to drop hours as the semester goes on. You said that hours are already flexible, which is great, but being able to move hours from one week to the next is not good enough. You need the ability to stop working all together if need be. As Myles commented, "In a bad semester you may have a full month where you risk burnout by working." Don't make matters worse by having a work schedule that can't be changed to meet your needs.

As for asking for a pay raise, I think this would be a bad idea. Not because it would look bad to your boss, but because you should be considering whether you can do the internship based on time commitment, not pay grade. If your boss agrees to pay you more, you will feel obligated to spend more time and energy at the internship, possibly at the expense of your research and coursework. Internships are important, but you have more to lose from a bad semester than to gain from an extended part-time internship.

First determine whether you have the ability to work part-time and still do well in your classes. If you are absolutely certain you can pull it off, then you can consider whether you want that pay raise or not. Again, honesty is your best policy here. Just explain that you have a very full semester already, and you need to a raise to make the internship worth spending your already limited time and energy. I would still certainly still require flexible hours, because you never know how the next few months will treat you.