Microsoft Will Start Charging Schools for Student Licenses: What Changes and How to Prepare

On November 5, 2026 Microsoft announced a rebuilt Microsoft 365 Education portfolio. The headline for most school IT teams: the free student licensing they've relied on for years is being retired. Office 365 A1, the Student Use Benefit program and free Exchange Online for Alumni all go away, and students who need email, Teams or SharePoint will need a paid licence.

Nothing changes overnight. But if your next renewal falls on or after January 1, 2028, the budget conversation starts now.

What is retiring

• Office 365 A1: end of sale through web direct on November 5, 2026, and through CSP and Volume Licensing on May 1, 2027. Retired January 1, 2028.
• Student Use Benefit: the program that gave students free licences matched to paid faculty seats retires January 1, 2028 across all Education purchasing programs.
• Free Exchange Online for Alumni: retires January 1, 2028, replaced by a paid alumni offer.
• OVS-ES and School 3 agreements are also planned to retire on the same date.

Existing licences keep working until the end of your current enrollment term. They can't be renewed or extended after that. Microsoft has also said early renewals designed to dodge the change aren't permitted.

What replaces it

The new lineup is A0, A2, A3, A5 and A7, each with faculty and student editions, and A2 and up are available with or without Teams.

• A0 (students only, no cost): Office desktop and web apps, OneDrive, Minecraft Education and Entra ID Free. No Exchange Online, no SharePoint, no Teams. It's only available if your faculty are fully covered on paid A2 or higher, for students using Windows devices, at up to 20 A0 licences per paid faculty licence.
• A2 (new, paid): adds Exchange, SharePoint, Teams, Microsoft Classroom, Copilot Chat, Entra ID P1, School Data Sync and basic device management. Available December 1, 2026.
• A3 and A5: the student experience is unchanged. Faculty editions gain Defender for Office 365 P1 (A3) and Intune Suite (A5) at the same list price.
• A7 (new): A5 plus Microsoft 365 Copilot, Agent 365 and Entra Suite. Available since October 1, 2026.

Microsoft says A2–A5 carry discounts of more than 80% compared with commercial pricing, and A7 up to 60%. Per-seat student prices for your agreement will come from your partner or account team, so don't budget off a list price you've read online.

The storage change people will miss

Today most tenants get a 100 TB base storage pool. From your first renewal on or after January 1, 2028, that base allocation is removed. Storage becomes the sum of what your paid licences contribute:

• Students: 4 GB (A2), 8 GB (A3), 12 GB (A5/A7). A0 contributes nothing.
• Faculty: 50 GB (A2), 75 GB (A3), 150 GB (A5/A7).

So a school that moves most students to the free A0 tier also shrinks its storage pool. If you're sitting on years of OneDrive and SharePoint data from former students, you either clean it up, archive it, or buy 10 TB storage packs.

Key dates

1. May 1, 2027: Academic Volume Licensing online services move to a single price across price levels, at your first renewal or extension after this date. A1 end of sale through partners.
2. January 1, 2028: A0, new A3 and A5 become available. A1, Student Use Benefit and free alumni Exchange retire. The new lineup and storage model apply at your first renewal or extension on or after this date.

Why licence hygiene suddenly matters in schools

For a decade, education tenants could afford to be sloppy about student licences because they cost nothing. Graduates kept their accounts. Students who changed schools stayed licensed. Nobody audited A1 seats because there was no line on the invoice.

That stops being harmless the moment each student seat has a price and a storage contribution. Before your renewal conversation, you want to know:

• How many student accounts are actually active? Leavers, graduates and duplicate accounts are the education version of disabled accounts holding licences.
• Who genuinely needs email and Teams? Students who only use Office apps on a Windows device might be fine on A0. Students who need email, Teams or SharePoint need A2 or higher.
• Is faculty fully covered on A2 or higher? That's the gate for A0. One gap and the free tier is off the table.
• How much storage are you using, and whose is it? Compare current consumption against what your planned licence mix will contribute.
• Which faculty A3/A5 features are in use? The same over-provisioning questions from our E5 vs E3 breakdown apply to A5 vs A3.

How SeatPrune helps

SeatPrune syncs your tenant through Microsoft Graph and shows licence assignments against real sign-in and app activity, so you can split students into "needs email and Teams", "Office apps only" and "hasn't signed in since last year" before you sign anything. It's flat-priced rather than per-user, which matters when your user count is mostly students.

We've added an Education plan at $39/month ($390/year): up to 3 tenants, unlimited students and staff, and everything in Business. It's available to any organisation whose tenant holds Microsoft 365 Education licences.

Run the pre-renewal audit well before your 2028 renewal. The cheapest student licence is the one for a student who left two years ago.

Sources: Microsoft Education blog, Microsoft 365 Education portfolio evolution and the Microsoft 365 Education FAQ. Confirm eligibility and pricing for your agreement with your Microsoft partner or account team.