This paper examines some of the issues surrounding student retention in higher education. It is based on the case study of a modern university in England that has good performance indicators of both widening participation (i.e. increasing the diversity of the student intake) and student retention. The two-fold nature of this success is significant, as it has been asserted that greater diversity will necessarily lead to an increase in student withdrawal. Furthermore, changes to student funding in the UK put greater financial pressures and stress on students, especially those from low-income groups. Nevertheless, many students cope with poverty, high levels of debt and significant burdens of paid work to successfully complete their courses of study. Drawing on the work of Reay et al. (2001), this paper adopts and explores the term ‘institutional habitus’, and attempts to provide a conceptual and empirical understanding of the ways in which the values and practices of a higher education institution impact on student retention.