This article examines the psychosocial consequences of meritocratic education systems, with particular focus on students who are positioned as having failed within these competitive and ostensibly fair frameworks. While meritocracy promises equal opportunity, extensive research shows that educational achievement is strongly shaped by socioeconomic background and by socially and culturally recognized codes and resources that systematically advantage some students over others. As a result, meritocratic selection often reproduces inequality while framing unequal outcomes as deserved. The article synthesizes evidence on how meritocratic ideology supports system justification, leading even disadvantaged students to internalize beliefs that school outcomes are fair. This contributes to self-blame, stigma, and psychological distress when performance falls short. The analysis further shows how educational failure carries long-term economic and social penalties, reinforcing class divisions and eroding social cohesion. The article outlines alternative educational logics that may mitigate these harms, including redistributive support, plural pathways, second-chance opportunities, broader conceptions of ability, recognition of diverse contributions, and cooperative learning. Together, these approaches offer ways to reduce the psychosocial burden of failure and support more equitable educational futures.