Psychological capital (PsyCap) is uniquely positioned at the intersection between student and academic institution. College administrators should look to psychological capital, beyond just student performance, for retention efforts in the financial management of the institution. The psychological capital and retention of four cohorts of freshmen at a small liberal arts residential college in the Southeast region of the United States were analyzed. The findings indicate that psychological capital, hope, and self-efficacy are predictors of freshmen to sophomore retention. Psychological capital impacts student performance, peer-group and faculty interactions, and should be considered as a method to manage dropout decision per Tinto's (1975) Institutional Departure Model. Psychological capital development initiatives should be incorporated into orientation and in freshmen core curriculum as a method to retain students.