Many school children in ethnically diverse countries live in multilingual environments where the medium of instruction in school differs from their mother tongue. We conduct a field experiment in a multiethnic village in northern India to study the relative importance of linguistic distance and neighborhood isolation in the acquisition of language and mathematics skills in elementary school. The village has two sizable ethnic groups speaking languages very different from the medium of school instruction. Students attempt a set of mazes and take tests in reading and mathematics. We find that performance in language-dependent tasks relative to mazes is lower for children whose mother tongue is different from the medium of instruction only if their ethnic group is also residentially segregated. Language policy in most countries has traditionally favored either mother-tongue instruction or assimilation into mainstream language and culture. Our results suggest that there may be value in a more nuanced approach that flexibly combines some instructional support in a mother tongue for those who need it, with policies that encourage contact with speakers of dominant languages to benefit from peers and social networks.