The flexible environment of nonformal primary schools in a community context in Bangladesh facilitates the individual development of young people who would otherwise be excluded from the school system. This paper aims to explore the features of institutional and wider context which support this nonformal learning environment, as well as contrasting it with those features which create a very different and far less flexible environment in formal high schools. The paper draws on a five-year longitudinal study of students making the transition from nonformal primary to formal high school using ecological systems theory as a framework from two geographical sites in Bangladesh. Data suggests that children's learning is facilitated by the interlinked contexts of nonformal school and family/community. In contrast, the separation of formal high school from family and community appears to contribute to early dropout. This paper raises some questions worthy of further research and will contribute to the emerging debate about nonformal education and its impact on future educational development for achieving millennium development goals (MDGs). (Contains 5 figures, 2 tables, and 8 notes.)