This paper discusses how student identities are constituted through social categories and how this affects students' educational trajectories. Dropout is often described as a sudden event but this paper demonstrates how dropping out is a long-term process involving social interactions between the students. It is based on a field study in which the author was enrolled as a student at the car mechanic program at a vocational education and training school. The various social categories emerge in contrast with each other and have fundamental influences in defining the students' scope of action. Divisions between the students were based on discourses of "ethnicity" and "seriousness." Four portraits of individual students, each belonging to a different peer group, are presented to describe the individual level of the peer-related dropout processes. The discussion calls for awareness of reproducing effects of taken-for-granted logics and discriminatory practices and for including identity-related perspectives on peer relations, when studying dropout.