Legal and social sanctions on overt discrimination in educational institutions were implemented to redress the inequalities associated with years of segregation and unequal treatment of groups on the basis of social identity characteristics such as race, gender, and nationality. In this article, we draw on research and theory demonstrating that, despite sanctions on overt discrimination, biases and cues of threat persist in educational institutions and are often present in subtle and ambiguous forms. These threats burden members of historically stigmatized groups (e.g., women, racial minority group members) with stress in the form of negative achievement expectations that ultimately undermine their psychological well-being and academic achievement and success outcomes. To capture the process by which these threats impact students from historically stigmatized groups, we present a critical review and analysis of research and theory from the identity-based Rejection Sensitivity literature. This literature demonstrates the interplay between the individual's appraisals and coping mechanisms with the threatening messages present in the environment. Our analysis applies a stress and coping framework to integrate the literatures on social identity threat and identity-based Rejection Sensitivity, and to ground education policy recommendations.