The most common advice these days regarding euros is for students to use their American debit (ATM) cards to draw cash from the many ATMs (cajeros automáticos) in Spain. The ATM will give euros (€1 = $1.3 roughly, but check for the most current exchange rate) although your account at home is denominated in dollars. ATM fees vary from bank to bank, but they typically charge from $3 to $5 a transaction or a percentage-defined commission (check with your bank in the U.S.). Shop around at home for a bank that offers a favorable currency conversion rate or commission.
We advise you to bring two American debit cards and carry only one on a daily basis (leave the other one safely at home at the orientation sites and in Madrid). ATMs can sometimes eat a card; it is rare, but it seems to happen at the worst possible times (hence the backup). Before departing for Spain, call your bank and debit/credit card companies and let them know the dates that you will be in Spain so they do not BLOCK it while you are abroad. This will almost certainly happen if you do not notify them in advance of your plans.
If you have dollars on you when you arrive at the airport and want to convert them to euros, your best bet is the American Express offices in the big international airports. In general, avoid exchanging dollars in small amounts–it can be quite expensive and make you lose too much money in the exchange.
The Program will disburse money to students at the beginning of every month to cover one meal a day (€11/day), the monthly transportation card, and the reimbursement of cultural activities (Guidelines for reimbursement of cultural activities).
Students staying for the entire academic year are advised to open a bank account at a Spanish bank–more information on this will be provided once you get to Madrid.