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IT Home reported on November 6 that Microsoft has announced changes to its Microsoft 365 Education licensing policy. It will gradually discontinue programs including the free Office 365 A1 and Student Use Benefit, and plans to remove educational institutions’ existing 100 TB of baseline shared cloud storage starting January 1, 2028.
Microsoft’s changes cover several areas, including education product licensing, alumni email, cloud storage allocation, and subscription pricing. The changes will be implemented in stages. Schools’ and universities’ existing licenses will not expire immediately, but they will need to adjust their licensing plans when they subsequently renew their contracts.
Microsoft first announced that it would stop selling Office 365 A1. Sales of the plan through the Web Direct channel ended on November 5, 2026. Sales through Cloud Solution Provider (CSP) and volume licensing channels are scheduled to end on May 1, 2027, with final retirement set for January 1, 2028.
For existing customers, institutions covered by an active Enrollment that began before May 1, 2027, can continue using their existing licenses for the duration of the current agreement. However, when those agreements come up for renewal or expire on or after January 1, 2028, the licenses can no longer be renewed or extended, and schools will need to move affected users to other licensing plans.
The Student Use Benefit program is also scheduled to retire on January 1, 2028. It will be removed from all education purchasing programs, including CSP and volume licensing. Existing licenses will remain valid for their current subscription terms, but cannot be renewed after retirement. Schools will need to identify students who still need the relevant services and assign them appropriate paid student licenses.
Microsoft will also discontinue the free Exchange Online for Alumni email service. Educational institutions that want to continue providing email to graduates will need to switch to a new paid alumni email plan. That paid plan is expected to launch through the CSP and Enrollment for Education Solutions (EES) channels on January 1, 2028. Open Value Subscription for Education Solutions (OVS-ES) and School 3 are also scheduled to retire on the same day.
Another significant change is that Microsoft will remove the existing 100 TB of free baseline shared storage for education tenants. Under Microsoft’s newly announced policy, educational institutions will no longer automatically receive this 100 TB of baseline capacity when they first renew or extend their contracts on or after January 1, 2028.
Previously, Microsoft provided education tenants with a shared storage pool covering OneDrive, SharePoint Online, and Exchange Online, with all 3 services drawing on the same allowance. Microsoft’s official documentation also states that the existing storage pool consists of an initial free 100 TB allowance, storage contributed by paid licenses, and additional purchased storage.
After the new policy takes effect, storage capacity will be calculated mainly according to license type and quantity. For student licenses, each Microsoft 365 Education A2 license contributes 4 GB, A3 contributes 8 GB, and A5 and A7 each contribute 12 GB. For faculty and staff licenses, each A2 license contributes 50 GB, A3 contributes 75 GB, and A5 and A7 each contribute 150 GB.
The new free A0 student license will not add storage for institutions. Storage used by its users will be deducted from the school’s existing shared storage pool.
Microsoft recommends that school administrators assess current storage use and future needs before renewing contracts, and develop a plan based on user numbers, the mix of licenses, and expected available storage capacity. If storage is insufficient, institutions can buy additional storage in 10 TB packages, upgrade to licenses that contribute more storage, clear existing data, or use Microsoft 365 Archive to archive inactive content.
As Office 365 A1 retires, Microsoft will also introduce a new Microsoft 365 Education licensing structure with 5 tiers: A0, A2, A3, A5, and A7. Each tier will have student and faculty and staff versions, as well as versions with and without Teams, allowing schools to assign licenses according to different users’ actual needs.
A0 is a free plan for eligible students that includes Office desktop and web apps, Minecraft Education, Microsoft Entra ID Free, and the Learning Zone learning experience.
However, schools must provide all faculty and staff with paid Microsoft 365 Education A2 or higher licenses, and students must actively use Windows devices for educational activities. A0 does not include Exchange Online, SharePoint Online, or Teams.
At the top of the new licensing structure is Microsoft 365 Education A7. IT Home noted that this plan adds advanced AI, identity management, security, governance, and device management features to A5, and includes services such as Microsoft 365 Copilot, Microsoft Agent 365, and Microsoft Entra Suite.
On pricing, Microsoft also plans to change how online services are priced through education volume licensing channels on May 1, 2027. At that point, online services purchased through Academic Volume Licensing programs will have uniform pricing across all Price Levels. The change will take effect when an educational institution first renews or extends its agreement on or after May 1, 2027, even if that renewal occurs before January 1, 2028.
Microsoft said educational institutions will continue to receive the licenses, service benefits, and pricing under their existing agreements until their current contract terms end. The new licensing structure and storage calculation method will apply when institutions first renew or extend their agreements on or after January 1, 2028.
References:
“Microsoft 365 Education portfolio evolution | Microsoft Learn”
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