Microsoft 365 Education licensing changes: what institutions need to know

Microsoft is preparing to implement changes to its education licensing portfolio. For universities and other education organisations, these updates create new opportunities around AI, security and identity, but they also make it increasingly important to understand exactly what is included, which users need which capabilities, and how future changes could affect renewal costs.

The right response is not simply to move every user to the newest licence. Institutions need to connect licensing decisions to their technology strategy, user requirements and wider commercial position.

Microsoft 365 A7 arrives for education

Microsoft added Microsoft 365 Education A7 to its Product Terms on October 1st 2026. It is now listed as both an Education Platform Product and a Student Offering under the Enrolment for Education Solutions programme.

For faculty, A7 brings together Microsoft 365 A5 with Microsoft 365 Copilot, Microsoft Entra Suite and Microsoft Agent 365. This creates a more integrated proposition for institutions looking to combine productivity, AI, identity and agent governance. However, entitlements can differ between faculty licences, paid student licences and Student Use Benefit licences, so the precise suite composition should always be confirmed, by your Softcat Microsoft Licensing Specialist, before an order is placed. 

This could make A7 relevant to institutions that are moving beyond isolated AI trials and considering wider adoption. It brings several important capabilities into one proposition, but a new suite is not automatically the most cost-effective option for every user.

Institutions should also compare A7 against their existing A3 or A5 estate, including any Microsoft 365 Copilot, security, identity or management add-ons already purchased. This helps identify overlapping subscriptions and avoids paying twice for capabilities already available elsewhere.

Understanding the current Student Use Benefit

Under the current Microsoft Product Terms, eligible academic customers can receive Student Use Benefit licences based on qualifying paid faculty, staff, Education Qualified User or Knowledge Worker licences.

For Microsoft 365 Education A3, A5 and A7, the current entitlement provides up to 40 student instances for each qualifying paid licence. Selected additional products use different ratios, commonly up to 15 student instances per qualifying licence. The exact entitlement depends on the qualifying product and Microsoft licensing programme. 

Student Use Benefit licences do not necessarily include everything contained in the corresponding paid faculty suite. 

Changes planned from January 2028

The current Microsoft Product Terms still set out today’s Student Use Benefit entitlements. However, Microsoft’s upcoming education changes are expected to reshape how institutions license students from January 2028. The planned changes outlined in Microsoft’s education briefing include:

• the retirement of Office 365 A1 and the existing Student Use Benefit model;
• a new free offer for qualifying students using Windows devices;
• a new lower-cost Microsoft 365 A2 proposition for students and faculty; (MA2 licence available from December 1st 2026)
• new paid student options across the Microsoft 365 A2 to A7 portfolio;
• changes to storage allocation and entitlements;
• the retirement of the OVS-ES and School Agreement programmes; and
• the introduction of additional on-premises capabilities through CSP. 

For existing customers, the briefing indicates that changes to Student Use Benefit will apply at the first full renewal on or after January 1st 2028. Institutions should validate the applicable transition arrangements against their own agreement and renewal date before making budgetary assumptions.  

There is unlikely to be a single answer for every institution. The impact will depend on the current agreement, renewal timing, number and type of users, existing licences and add-ons, device strategy, required storage, and the capabilities that genuinely need to be extended to students.

New choices bring new benefits

The expanded education portfolio should give institutions greater choice over how capabilities are assigned. For example, a university might decide that A7 is appropriate for staff working with sensitive institutional data or those making regular use of Microsoft 365 Copilot. Other groups may be well served by A3, A5 or a lower-cost student proposition. The opportunity is to create a more deliberate licensing model instead of applying the same suite to every population.

Potential areas of benefit include:

AI adoption

A7 provides a route for bringing Microsoft 365 Copilot into a broader productivity and security proposition. Institutions should still establish which roles have a strong use case, whether the underlying information is ready for Copilot, and what training and adoption support users will need.

Identity and access

The inclusion of Microsoft Entra Suite within the faculty A7 proposition can support institutions looking to strengthen identity, access and governance. Its value should be assessed against existing identity products and the institution’s target security architecture.

Agent governance

Microsoft Agent 365 introduces capabilities relevant to the management of AI agents. As institutions develop their use of agents and automation, licensing decisions will need to be considered alongside data access, security, ownership and governance.

Greater licensing flexibility

The introduction of additional paid student suites may allow institutions to align investment more closely to different student requirements. This could be useful where certain cohorts require advanced security, management or AI capabilities while others need a lighter productivity experience.

Six questions institutions should be asking now

There is time to prepare but waiting until the renewal quote arrives could unnecessarily limit the available options. Institutions should start by asking:

• When is our next full Microsoft renewal?

Renewal timing will determine when future changes may begin to affect the institution.

• Who is included in our Education Qualified User count?

This should be checked against the institution’s Microsoft agreement rather than assumed to include every employee.

• Which licences and add-ons are currently assigned?

A clear inventory can expose unused licences, overlapping products and differences between purchased and assigned quantities.

• Which users genuinely require advanced AI, security or identity capabilities?

This enables the institution to compare targeted licensing against a broader suite transition.

• What will the changing student model mean commercially?

Faculty, paid student licences and Student Use Benefits should be modelled separately, including the effect of different user populations and entitlements.

• What are my storage requirements and what will my future allowance be?

Comparing current storage usage and future needs with expected allowances helps institutions identify potential gaps and factor any additional costs into renewal planning and budgets.

How can Softcat support?

At Softcat, our role is not simply to provide a renewal quote. We help customers translate Microsoft’s licensing changes into a clear, institution-specific commercial and technology plan.

We can support institutions by:

• confirming the current agreement, renewal date and academic eligibility;
• reviewing the Education Qualified User position;
• reconciling purchased, assigned and actively used licences;
• separating faculty, staff and student requirements;
• identifying potentially duplicated licences and add-ons;
• comparing the existing estate against A7 and other future suite options;
• modelling customer-specific commercial scenarios;
• validating current Product Terms, channel availability and transition rights;
• aligning licensing decisions with AI, identity, security and storage strategies; and
• supporting pilots, data-readiness assessments, governance and user adoption.

This provides a decision-ready view of the available options, including the capabilities gained, the commercial implications, areas of risk and the actions required before renewal.

Prepare early, decide with evidence

Microsoft’s education licensing changes represent more than a product update. They create an opportunity for institutions to reconsider how technology is provided across different user groups and how investment supports wider priorities around AI, cyber security, digital learning and operational efficiency.

Softcat can help you review your current licensing position, understand how the changes could affect your institution, and compare the available options ahead of your next renewal.

To start that conversation, please reach out to your aligned Account Manager or contact a member of our Sales team.

Interested in finding out more? Sign up for our webinar on 11 November.Empty heading