Existing research indicates that racially minoritized students with similar academic preparation are less likely than their represented peers to persist in STEM, raising the question of factors that may contribute to racial disparities in STEM participation beyond academic preparation. We extend the current literature by first examining race-based differences in what students expect to receive and their actual grades in introductory STEM college courses, a phenomenon termed as overestimation. Then, we assess whether overestimation differentially influences STEM interest and persistence in college. Findings indicate that first-year STEM students tend to overestimate their performance in general, and the extent of overestimation is more pronounced among racially minoritized students. Subsequent analyses indicate that students who overestimate are more likely to switch out of STEM, net academic preparation. Results from regression models suggest that race-based differences in overestimation can be explained by pre-college academic and contextual factors, most notably the high school a student attended. [This work was supported by the University of California Irvine Education Research Initiative.]