Grade retention is often perceived as an academic failure and a negative response from the educational system. Hence, based on the social cognitive theory, being retained might decrease self-efficacy. This way, we expect that retainees are less likely to pursue a degree in higher education. Retainees that do enroll in higher education, are expected to opt for a college of applied sciences instead of university. We assume that self-efficacy mediates the association between grade retention and post-secondary schooling choices of retained students. In addition, based on comparative reference group taking, we expect the impact of being retained to be more detrimental in schools with a low percentage of retainees. If true, this would signal a school retention composition effect. Longitudinal, multilevel analyses were carried out on the International Study of City Youth (ISCY) dataset (1252 respondents, 30 schools in Ghent, Flanders). Results show that being retained significantly decreases the likelihood of higher education enrollment, while those students who do enroll, are less likely to opt for university. There was a mediation effect of self-efficacy with regard to program choice, but not for higher education enrollment. We did not find a moderation effect of school retention composition. Implications are discussed.