This article seeks to understand stigma faced by students from groups who enter higher educational institutions on the basis of affirmative action. The article uses the theoretical insights from the “stereotype content model” which disentangles the social-psychological mechanisms of “externalization” and “internalization.” The data are from a primary survey administered to university students in India to understand the channel of stigma associated with caste-based affirmative action (AA). The article finds that despite a significant gap in entry scores at admission, there are no significant differences in the effort and academic attitudes between AA and non-AA students. Yet, there are clear and significant differences between caste groups that reveal the presence of stigma through the “externalization” mechanism, that is, upper caste peers tend to evaluate beneficiary performance prejudicially, indicating the prevalence of discriminatory attitudes toward students who are admitted through AA. However, there is no compelling evidence of “internalization”: that is, students from beneficiary groups do not necessarily internalize their peers' low evaluation of their own competence. These findings suggest the need for establishing an antidiscriminatory apparatus inside higher educational institutions to counter stigmatizing attitudes and microaggressions against AA admits.