Microsoft has announced a substantial change to its Microsoft 365 Education licensing. For schools, the key date is the first contract renewal or extension on or after 1 January 2028. Most portfolio changes will apply then. Existing agreements, licences and entitlements remain in place until the relevant renewal or extension.
The announcement covers more than new product names. It changes the options available for students, retires several existing benefits and changes how Microsoft calculates pooled storage. The cost and operational impact will depend on each school’s contract, current licence mix, services in use and storage requirements.
Schools relying on A1 face the biggest change
The greatest direct impact is likely to be felt by schools that rely heavily on Office 365 A1. If they need to retain the same services for those users after renewal, they’ll need to identify suitable replacement licences.
A0 offers eligible students a no-cost option, but it doesn’t include Exchange Online, SharePoint Online or Teams. Schools that need those services may need to consider a paid offer such as A2, or another suitable licence, depending on what each group of users requires. For affected A1 users, the scale of the change will depend on how much functionality they need to keep.
For some schools, this could prompt consideration of a move to a different digital ecosystem. My assumption is that many will stay with Microsoft and adapt their licence mix. Replacing established systems, data and working practices would bring its own costs and disruption. That’s an expectation, rather than something Microsoft’s announcement establishes.
What changes, and when?
There are two dates to put in the renewal calendar:
- 1 May 2027: Online Services bought through Academic Volume Licensing move to a single consistent price across Price Levels at the school’s first renewal or extension on or after this date.
- 1 January 2028: Most portfolio changes apply at the first renewal or extension on or after this date. These include the retirement of Office 365 A1, the Student Use Benefit and free Exchange Online for alumni, as well as the new storage model.
These changes are tied to each school’s renewal or extension, rather than one cut-off when every school must change at once. Schools should confirm how the dates apply to their agreement with Microsoft or their licensing partner.
Student licences need a closer look
Microsoft is introducing Microsoft 365 Education A0, a no-cost option for eligible students. Microsoft’s guidance says eligibility depends on the school having full paid faculty coverage on A2 or higher, and students actively using Windows devices for education. A0 includes selected learning and productivity capabilities, but it doesn’t include Exchange Online, SharePoint Online or Teams. A0 students also don’t add storage to the school’s pool.
A0 shouldn’t be treated as a like-for-like replacement for every student currently using A1 or a Student Use Benefit licence. Schools will need to identify which pupils rely on email, Teams, SharePoint or other services A0 doesn’t include, then check suitable paid student options and their costs.
The Student Use Benefit will also retire. Schools should count the students using those licences and identify which services they need to retain after the current subscription term. The number of students affected, and the services they use, will shape the transition plan.
Storage becomes part of the renewal calculation
Microsoft currently provides a tenant-wide 100 TB base storage allocation. At a school’s first renewal or extension on or after 1 January 2028, that base allocation will be removed. Storage will remain pooled, with capacity based on eligible paid faculty and student licences. Different licence types contribute different amounts, and A0 contributes none.
Schools should compare their current storage use and expected growth with the allowance their future licence mix would provide. That review should include OneDrive, SharePoint and Exchange, along with inactive accounts, retained content and data that no longer needs to be kept in active storage.
If projected use exceeds the new allowance, the school will need to consider its options before renewal. These could include changing the licence mix, reducing stored data or buying extra storage. Microsoft’s portfolio FAQ gives the new contribution rates and explains that organisations stay on the current storage model until they renew or extend under the new offers.
Faculty licences gain additional features
Microsoft says A3 Faculty will include Defender for Office 365 Plan 1, and A5 Faculty will include Intune Suite. These additions may affect how schools assess the value and fit of those licences, particularly where they already buy similar security or device management capabilities separately.
Cost is likely to be the first concern for many schools, and rightly so. Changes to student licences, alumni email and storage could affect renewal budgets. But Microsoft’s stated rationale also includes improving security and device management.
If schools assign a clear value to the security improvements and compare them with the cost of licences or tools they currently use, the changes may feel more palatable. At present, the added security can look like a value-for-money bolt-on, or be perceived that way, because its contribution isn’t always priced or assessed separately. Schools should compare the included capabilities with their existing provision before deciding what value they add.
Worked examples for different school settings
These hypothetical examples show how schools might begin their planning. They aren’t recommended licence mixes or price forecasts. Storage figures count only the assumed licence contributions under Microsoft’s new model. They exclude eligible add-ons or other licences. The examples use the rates in Microsoft’s portfolio FAQ.
For simplicity, each example assumes full paid faculty coverage on A2 or higher. Eligible institutions can assign up to 20 A0 student licences per eligible paid faculty licence, subject to A0’s other eligibility requirements. A0 doesn’t include Exchange Online, SharePoint Online or Teams, so schools would need to check each group’s service requirements.
Two-form entry primary school
Illustrative profile: 420 pupils and 55 faculty and staff.
Suppose the school has 45 faculty on A3 and 10 on A5. It assigns 300 pupils paid A3 student licences and 120 eligible pupils A0. The assumed faculty licences contribute about 4.9 TB: 45 × 75 GB plus 10 × 150 GB. Paid student licences contribute 2.4 TB: 300 × 8 GB. Together, that’s about 7.3 TB, before other eligible licences or add-ons.
Planning question: How much of the school’s current pooled storage is in use, and which pupils need Teams, Exchange or SharePoint?
Three-form entry secondary school
Illustrative profile: 1,500 pupils and 160 faculty and staff.
Suppose 120 faculty licences are A3 and 40 are A5. The school assigns 1,000 pupils paid A3 licences and 500 pupils A0. Those assumptions produce about 15 TB from faculty licences and 8 TB from paid student licences, or about 23 TB in total. A0 students use the shared pool but add no capacity.
Planning question: Which pupil groups need paid student services, and which could use A0’s more limited offer?
Multi-academy trust
Illustrative profile: 12 schools, 7,500 pupils and 750 faculty and staff.
Suppose 600 faculty licences are A3 and 150 are A5. The trust assigns 5,500 pupils paid A3 licences and 2,000 pupils A0. The assumed faculty mix contributes 67.5 TB, and the paid student licences contribute 44 TB, for 111.5 TB in total. This is an estimate based on the example licence mix, not a prediction of the trust’s final entitlement or storage needs.
Planning question: How will the trust allocate licences across schools, and could shared storage growth exceed the contribution from the planned mix?
Build the budget from actual use
The announcement doesn’t mean every school will see the same bill. Microsoft says the effect will vary according to current benefits, faculty and student licensing needs, storage requirements and renewal timing. Its FAQ says list pricing for existing Microsoft 365 faculty suites won’t change, while a school’s actual renewal price may vary with its price level, purchasing programme and selected licence mix.
A useful budget estimate will start with a user and service audit, rather than applying a single percentage increase. Schools can model several scenarios: retaining the current service mix where possible, moving different groups to different licences, and allowing for storage above the new pooled entitlement.
A practical renewal checklist
- Confirm the next renewal or extension date and purchasing programme.
- Count staff and students by current licence, including Office 365 A1 and Student Use Benefit users.
- Record who depends on Exchange, Teams and SharePoint, including alumni using free Exchange Online.
- Check current pooled storage and estimate likely growth before renewal.
- Identify security and device management features already in use, including separate add-ons.
- Model the replacement licence mix and ask for renewal pricing for each scenario.
- Agree a transition plan with the school’s Microsoft account team or licensing partner before the contract is due.
Starting with this information gives school leaders and finance teams a clearer basis for deciding what to retain, what to change and what to budget for. Microsoft recommends reviewing licences, benefits, faculty-to-student mix, Teams configuration and storage, then working with its account team or a partner on a transition plan.