Higher education students are increasingly using generative AI in their academic work. However, existing institutional practices have not yet adapted to this shift. Through semi-structured interviews with 23 college students, our study examines the environmental and social factors that influence students' use of AI. Findings show that institutional pressure factors like deadlines, exam cycles, and grading lead students to engage with AI even when they think it undermines their learning. Social influences, particularly peer micro-communities, establish de-facto AI norms regardless of official AI policies. Campus-wide ``AI shame'' is prevalent, often pushing AI use underground. Current institutional AI policies are perceived as generic, inconsistent, and confusing, resulting in routine noncompliance. Additionally, students develop value-based self-regulation strategies, but environmental pressures create a gap between students' intentions and their behaviors. Our findings show student AI use to be a situated practice, and we discuss implications for institutions, instructors, and system tool designers to effectively support student learning with AI.