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Microsoft 365 Education is changing: Why Institutions Should Start Planning Now

November 13, 2026 5 min read

Microsoft has announced significant changes to its Microsoft 365 Education portfolio, bringing new licensing options, enhanced AI and security capabilities, and a different approach to faculty, student and storage entitlements.

For schools, colleges and universities, there's an important message behind the headlines:

Don't panic, but do start planning.

The changes will be introduced over time rather than overnight. Microsoft says its standardised pricing approach for Online Services purchased through volume licensing begins at an institution's first contract renewal or extension on or after 1 May 2027. Most wider portfolio changes take effect at the first renewal or extension on or after 1 January 2028. Existing agreements and entitlements remain in place until the applicable renewal or extension. Future-ready education: Evolving Microsoft 365 Education

That gives education organisations an opportunity to understand the changes early and, critically, plan the most cost-effective route through them.

What's changing?

Microsoft has announced the retirement of: 

  • Office 365 A1

  • Free Student Use Benefit licenses

  • Free Exchange Online for Alumni

  • OVS-E licensing

These offers will no longer be available from an institution's applicable renewal or extension on or after 1 January 2028.

Microsoft is also expanding its Education portfolio, with student and faculty offerings ranging from A0 through to A7, including options with and without Teams.

At the top of the new portfolio, Microsoft 365 Education A7 brings together Microsoft's most advanced AI, security, governance, identity and device-management capabilities, including Microsoft Copilot, Agent 365 and Microsoft Entra Suite. Initial indications show us this will be heavily discounted vs the corporate rate but full pricing hasn’t been released for the UK yet.

Existing A3 and A5 faculty offerings are also receiving additional capabilities. Microsoft says Defender for Office 365 P1 will be added to A3 Faculty, while Intune Suite adds advanced endpoint-management capabilities to A5 Faculty. Future-ready education: Evolving Microsoft 365 Education

Don't overlook storage

Today, many education institutions are accustomed to Microsoft's existing pooled-storage model.

Under the new approach, storage remains pooled tenant-wide, but capacity at the applicable renewal will be based on paid faculty and student licences. Paid student licences will contribute towards the institution's storage allocation for the first time, while faculty contributions across the paid suites will increase. Future-ready education: Evolving Microsoft 365 Education

That means decisions about licensing and storage increasingly need to be considered together.

For example, our initial modelling shows how dramatically different combinations of free and paid student licences could change the storage available to an institution.

For an illustrative organisation with 200 faculty and 2,000 students, an A3 Faculty/A3 Student model could provide approximately 31 TB of pooled capacity based on the announced entitlements. If the same organisation placed its 2,000 students on free A0, its 200 A3 Faculty licences alone would contribute approximately 15 TB.

For institutions with substantial OneDrive, SharePoint or Exchange consumption, that difference could prove considerably more important than the headline cost of student licences.

The right answer will depend on each organisation's circumstances.

Start with people and requirements, not licences

This is why we don't believe education institutions should start by asking:
"Which Microsoft licence replaces what we have today?"

A better starting point is:
"What do our different users actually need?"

A student who needs productivity tools has a different requirement from one who also needs email, Teams, a managed device or additional security capabilities. Likewise, faculty, professional services staff and other user groups may have very different requirements.

Microsoft's new portfolio creates greater scope to align licensing with those different needs. Microsoft explicitly describes the ability to mix free and paid student offerings and different licensing across user types. Future-ready education: Evolving Microsoft 365 Education

Approached correctly, therefore, this is an opportunity to optimise, rather than simply migrate, your Microsoft estate.

Six questions education institutions should be asking now

We recommend establishing a baseline across six areas:

  1. How much OneDrive, SharePoint and Exchange storage are we consuming today?
  2. At what rate is that consumption growing?
  3. How many faculty, staff and students do we have, and how are they currently licensed?
  4. Which user groups genuinely require email, Teams, managed devices or advanced security?
  5. How could those personas map to A0, A2, A3, A5 or other appropriate Microsoft licensing?
  6. When does our current Microsoft agreement renew or extend?

That baseline allows an institution to model different scenarios well ahead of its applicable renewal.

Where Smartdesc can help

As a Microsoft Tier 1 Direct CSP partner, Smartdesc can help education organisations turn Microsoft's announcement into a practical transition plan.

Our approach isn't about creating urgency where it doesn't exist or automatically moving every user onto another paid licence. It's about understanding your environment and finding the most commercially effective combination of licensing, functionality and storage.

It's about understanding your environment and finding the most commercially effective combination of licensing, functionality and storage.

That can include assessing: 

  • Existing Microsoft licences and entitlements;

  • faculty, staff and student personas;

  • Current and projected storage consumption;

  • Requirements for Teams, email and device management;

  • Security, governance and AI requirements;

  • Potential licensing scenarios;

  • Renewal and transition timelines; and

  • Opportunities to minimise unnecessary Microsoft spend.

Microsoft itself recommends that institutions review their renewal date, existing licences and benefits, faculty/student mix, Teams configuration and storage requirements, and then work with their Microsoft account team or partner to build a transition plan. Future-ready education: Evolving Microsoft 365 Education

Don't wait until renewal

A licensing decision made under renewal pressure is very different from a considered strategy based on real user requirements, accurate storage data and several properly costed scenarios.

Talk to the Smartdesc team and book a free Microsoft Licensing Assessment with us, to help you fully understand and start building your transition plan to minimise the cost impacts of these changes.

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