Students in higher education are increasingly part of international classrooms. While these classrooms have the potential to catalyze learning, they also come with lower senses of inclusion and psychological safety--factors that are crucial for learning. In the current study, we empirically test a contextual model in which these psychological costs are related to the number of cultural misunderstandings which are, in turn, associated with the prevailing diversity approach. Specifically, we surveyed the experiences of 360 university freshman enrolled in either a mononational or an international version of an otherwise identical educational program in the Netherlands, allowing us to investigate the unique effects of studying in an international classroom. Quantitative analyses exposed that students in international (vs. mononational) classrooms indeed experienced heightened levels of cultural misunderstandings that, in turn, were related to lower senses of inclusion and psychological safety. Crucially, this chain of effects differed depending on whether students perceived the diversity approach as more multicultural vs. colorblind. When lecturers were perceived to adopt a multicultural approach (i.e. recognizing and valuing cultural diversity), students experienced less cultural misunderstandings, and, therefore, less negative outcomes associated with studying in international classrooms. However, when lecturers were perceived to communicate a colorblind approach (i.e. overlooking cultural differences), cultural misunderstandings and their concomitant negative effects remained high. Together, these findings postulate a contextual model to understand why students' sense of inclusion and psychological safety may be jeopardized in international classrooms and encourage further research on both the mechanisms and potential benefits of a multicultural approach.