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Co-operative education (co-op) programs are widely promoted as equalizers of career opportunity, yet little is known about how they stratify students into divergent labor market trajectories. Drawing on universities’ dual functions as sieves and incubators, our study examines how co-op programs sort students into specialized versus exploratory work trajectories and the institutional mechanisms that shape those pathways. Using an explanatory sequential mixed-methods design, we analyze administrative records for 5,230 students across three cohorts at a large private research university with an extensive co-op program, combined with 34 semi-structured interviews with undergraduates who completed at least two co-ops. Specialization was operationalized using a normalized Herfindahl-Hirschman Index applied to employer-reported co-op functions. Logistic regression and multilevel models identify college of major as the strongest predictor of trajectory type (ICC = 0.158), with STEM-affiliated colleges producing substantially higher odds of specialization. Women and Black, Hispanic, and other racially minoritized students are less likely to follow specialized trajectories, even after controlling for major. Qualitative findings surface a key mechanism: college-embedded extracurricular ecologies (technical clubs, peer mentorship, and employer pipelines) compound early sorting by channeling some students toward specialization while leaving others to navigate exploratory pathways without equivalent institutional scaffolding. Our findings challenge mobility narratives around experiential learning by demonstrating how co-op programs can reproduce labor market inequality through the very organizational structures designed to support students.