Despite the dramatic increase in children's experiences in cohabiting families, little is known about how living in such families affects children's academic success. Extrapolating from two theoretical frameworks that have been commonly used to explain the association between parental divorce and educational outcomes, the authors constructed competing hypotheses about the effect of maternal cohabitation on educational expectations, achievement, and attainment. The analysis of data from the National Survey of Families and Households shows that children who lived with cohabiting mothers fared exceptionally poorly and sometimes were significantly worse off than were children who lived with divorced or remarried mothers. The authors conclude that studies that have ignored cohabitation have probably overestimated the negative effects of divorce on educational outcomes. High levels of family instability that are associated with cohabitation may be one reason why children whose mothers cohabit do less well than do children with other types of family experiences.