The retired Dean of St. Teresa College, Yogindra Vashist (Rishi Kapoor), lies gravely ill in hospital. As some of his former students gather at his deathbed, Kaizaad "Sudo" Sodabottleopenerwala (Kayoze Irani), Tanya Israni (Sana Saeed), Jeet Khurana (Sahil Anand) and Shruti Pathak (Mansi Rachh) reminisce about their student years in St. Teresa College ten years before, and the events that led up to the present day.

In a flashback, Rohan Nanda (Varun Dhawan), the son of a business tycoon, Ashok Nanda (Ram Kapoor), grapples with a complex relationship with his father and knows that winning the Student of the Year trophy will bag him the approval that he subconsciously craves for. Shanaya Singhania (Alia Bhatt) is the popular yet arrogant girl whom every guy in the college wants to be with. Abhimanyu "Abhi" Singh (Sidharth Malhotra), who comes from a middle-class family, is there on a scholarship, and wants to achieve great heights of success and prosperity; the first step to which will be the Student of the Year trophy. When Rohan and Abhi, with distinct backgrounds and clear goals, clash with each other in the locker room, football field and the canteen, there is no question in anyone's mind that the preset equations of the St. Teresa's campus are about to change.

Abhi and Rohan's rivalry takes an unexpected turn to friendship when Abhi takes blame for a prank Rohan played on the coach and himself getting Rohan out of trouble. This softens Rohan's heart and when he finds out that Abhi's parents are dead, he consolidates him and a frienship happens to bloom. When introduced to Rohan's father, Abhi admits that he wanted to be like him, which prompts Ashok to say that Abhi is more like a son to him, and that he doesn't approve of what Rohan does. Things are further knotted up when Shanaya enters the equation. While Shanaya and Rohan are childhood sweethearts, Abhi is attracted to Shanaya at first, but when confronted by Rohan, dismisses her as 'not his type'. Tanya continues to try and weaken the relationship of Shanaya and Rohan by flirting unabashedly with Rohan who enjoys her attention, upsetting Shanaya time and again. She seeks the help of Abhimanyu, to make Rohan realise what he is missing out on by making him jealous when Rohan and Shanaya go on also during his elder brother's wedding in Thailand. As Shanaya flirts with Abhimanyu to try and reclaim Rohan's attention, which she eventually does, Abhimanyu falls in love with Shanaya. Looming large over the various friendships in the campus is the Student of the Year tournament and the Dean's emphasis on success and victory, which they face upon returning from the wedding.

Abhi gradually moves away from Shanaya after she finds out that he likes her, and despite her attempts to reconnect with him, he doesn't respond. After Rohan, Abhi and Shanaya are selected for the competition, Abhi and Shanaya's team win the first segment of the competition. To celebrate Abhi's victory Rohan invites himself to Abhi's uncle's house, where Abhi's grandma has a sudden heart attack. The next day, Shanaya turns up with flowers for Abhi's grandma which then becomes a routine that brings her closer to Abhi. After Abhi's grandma dies, he turns reclusive and tries to avoid everyone including Shanaya, but an unexpected moment leads to them kissing only to be caught by Rohan. A fight between Rohan and Abhi ensues in which both of them get severely hurt. Shanaya then gets very upset and says that neither of them care about her or her feelings and just think that she is a prize that they can win by fighting. Beat up, Rohan arrives home where his father Ashok argues with him about his actions, which prompts Rohan to say that he doesn't want to be his son any more and walks out. The foes-turned-friends-turned foes are now ready for a face-off and battle lines are drawn through the length and breadth of the campus, with only one goal in everyone’s eyes - the Student of the Year trophy. Shruti and Shanaya have a big fight as well because Shanaya is confused between Rohan and Abhi, when Shruti, not-so-subtly tries to get Shanaya to drop out of the competition so she will have a better chance of progressing to the third stage. At the second segment, which is the prom, Shanaya goes to the prom with Jeet, Rohan with Tanya and Abhi with Shruti. During the second segment of the competition, Rohan realizes that Shanaya does love Abhi but can't show it because of the tension among the three. In the final segment Rohan wins, with Abhi coming in a very close second. At the awards ceremony, the Dean gives the award to Rohan, but he does not accept it. A drunk Sudo insults the Dean for creating a competition which created rift among friends.

Ten years later when Abhi and Rohan meet again at the hospital where their former Dean lies dying, we discover that Abhi and Shanaya are happily married, Abhi is now the successful business tycoon he had always dreamed of being, and Rohan has fulfilled his dream of becoming a star rock musician. In a fight between Abhi and Rohan it is finally revealed that, ten years before, Rohan did not accept the Student of the Year award because he knew that Abhi lost on purpose. Abhi explains to Rohan that he saw his father enjoying Rohan lose, after which he decided to lose to teach Rohan's father a lesson. When Rohan remembers the past about Abhi and Shanaya, he starts a fight with Abhi, which then ends in them making up. In the end, Abhi and Rohan race together in a stadium, showing that nothing can break their friendship.

Student of The Year
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