- This paper documents the structure and composition of social networks on university campuses and investigates the processes that lead to their formation. Using administrative data and information from Facebook.com, we document the factors that are the strongest predictors of whether two students are friends. Race is strongly related to social ties, even after controlling for a variety of measures of socioeconomic background, ability, and college activities. We develop a model of the formation of social networks that decomposes the formation of social links into effects based upon the exogenous school environment and effects of endogenous choice arising from preferences for certain characteristics in one's friends. We use student-level data from an actual social network to calibrate the model. We simulate the social network under alternative university policies aimed at reducing social segmentation. We find that changes in the school environment that affect the likelihood that two students interact have only a limited potential to reduce the racial segmentation of the social network. 2007 Elsevier B.V. All rights reserved.