Academic failure is an important and personal event in the lives of university students, and the ways they make sense of experiences of failure matters for their persistence and future success. Academic failure contributes to attrition, yet the extent of this contribution and precipitating factors of failure are not well understood. To illuminate this world-wide problem, we analysed institutional data at a large, comprehensive Australian university and surveyed 186 undergraduate students who had failed at least one unit of study in 2016, but were still enrolled in 2017. Academic failure increased the likelihood of course attrition by 4.2 times. The students who failed and persisted attributed academic failure to a confluence of dispositional, situational, and institutional factors. There was a compounded effect of academic failure on already-vulnerable students resulting in strong negative emotions. Viewing persistence as an interaction between individuals and their sociocultural milieu opens up different avenues for research and considerations for support.