8 min readUnlicensed OneDrive user accounts: All you need to know

Microsoft has introduced a new policy earlier this year that instates — Unlicensed  OneDrive accounts will be automatically archived after 93 days of license removal.

Also, all purview features work with those archived unlicensed OneDrive accounts, including retention policies, legal holds, and eDiscovery search & export.

	Unlicensed OneDrive accounts subject to a retention policy, retention period, or legal hold — While these accounts remain visible to admins through administrative tools, neither admins nor end users have access to their content. Access stays restricted until administrators take specific actions.
	Unlicensed accounts not covered by any retention policy or legal hold — If billing has not been enabled after 93 days of license removal, these accounts will begin the deprovisioning process: Including being moved to the recycle bin. Honors the OneDrive retention period, but the account will be in the archive state by default throughout the retention period.

However, if the retention period lapses without reinstating a valid licence or enabling billing, the content will be permanently deleted following the deprovisioning process.

In a nutshell, below is a comparison of the behavior of the system before and after the implementation of Microsoft’s new policy on Unlicensed OneDrive User Accounts.

These changes DO NOT apply to EDU, GCC, or DoD customers.

How does an account get unlicensed?

When a Microsoft OneDrive account becomes unlicensed, it means that the user no longer has a valid license associated with their account. This can happen for various reasons, such as

• Expiration of a subscription
• Removal of a license by an admin
• User is deleted from Entra ID
• Changes in the organization’s licensing agreements

Timeline for Accounts Unlicensed

Timeline for accounts unlicensed before July 28, 2025

• September 26, 2025: By this date, all unlicensed accounts transition to read-only mode. Admins are advised to check after this date. Checking earlier can result in an incomplete status snapshot.
• October 29, 2025: By this date, all unlicensed accounts are archived. Admins are advised to check after this date. Checking earlier can result in an incomplete status snapshot.

Timeline for accounts unlicensed after July 28, 2025

For accounts unlicensed after July 28, 2025, the account will be put into read-only mode on the 60th unlicensed day, and will be archived or moved to the recycle bin on the 93rd unlicensed day.

Example:

• Unlicensed Date: October 1, 2025
• Day 60: Nov 30, 2025. The OneDrive account is placed in read-only mode.
• Day 93: January 2, 2026: The account is archived. If the user is still active in Entra ID but the admin hasn’t enabled billing, then this is also the date on which the account will begin the deprovisioning process.

Admins are encouraged to monitor account statuses based on these timelines to ensure compliance and take any necessary actions.

Unlicensed OneDrive Users Report

You can pull a report on unlicensed OneDrive accounts from the SharePoint admin center(https://admin.microsoft.com/sharepoint).

The following steps show how to generate one such report of unlicensed OneDrive accounts:

1. Sign in to the SharePoint admin center with your work or school account.
2. Go to Reports and select Microsoft OneDrive Accounts.
3. You can download the report as a CSV file.
4. You can select a username to view the details.

The report shows how many accounts are unlicensed and username, email address, account type, and last activity date of each unlicensed Microsoft OneDrive account.

It will also display the reason why out of the below possibilities:

• Retention period – Account is no longer licensed but is still active because a retention period setting is keeping the account from being deleted.
• Retention policy – Account is no longer licensed but is still active because a retention policy in Purview is keeping the account from being deleted.
• Active user with no license – Account is active but is not licensed. This can arise if the license is removed but the user is not removed from Entra IDAAD.
• Duplicate accounts – Account is a duplicate because a licensed user has multiple OneDrive accounts associated with them. Duplicate accounts (also known as non-primary accounts) may arise if a user has geographic move, or if a user leaves and then rejoins an organization, or it may arise from other factors.

Actions on Unlicensed OneDrive accounts

After you identify the unlicensed OneDrive accounts, admins can choose to re-license or delete the account.

1. Reactivate Account by assigning License

Prior to the unlicensed OneDrive account archival

During the 93-day window, to restore access for an unlicensed OneDrive account, assign the user a Microsoft 365 or Office 365 subscription that includes OneDrive. This license will:

• Allow the user to access their OneDrive files using their work or school account
• Enable you to manage their OneDrive settings and policies

You can assign licenses individually or in bulk using either of these methods:

• Microsoft 365 admin center: Assign licenses directly to user accounts
• PowerShell: Bulk assign licenses through scripts

After the unlicensed OneDrive account archival

After the 93-day window, Unlicensed OneDrive accounts will be automatically archived.

1. If the archived OneDrive account has an associated user as the owner (also known as the primary site collection administrator)
   • The IT admin can assign a valid license to the associated user, and the account will be automatically reactivated within 24–48 hours.
   • Adding a license (for example, through the Microsoft 365 admin center) does not incur any reactivation fee and does not require billing to be enabled for the account to be reactivated.
2. If the archived account doesn’t have an associated user (for example, if the identity was deleted)
   • Accounts whose identity are deleted implies they no longer exists in Azure AD/Entra. Such accounts cannot be relicensed.
   • In these cases, Microsoft recommends you move the data to another site or location before it’s deleted permanently.

For more information on licensing and active users in Microsoft 365, see Assign or unassign licenses for users in the Microsoft 365 admin center.

2. Access Account

Admins can access the OneDrive data of the now inaccessible unlicensed OneDrive account, by setting up the following pre-requisites to set-up the Microsoft-Archive.

1. Login Microsoft 365 Admin Center as a Global admin or SharePoint admin.
2. Set up and link Azure subscription in Syntex pay-as-you-go.
3. Enable “Manage archived unlicensed OneDrive accounts” as highlighted below.

3. Delete Account

Prior to the unlicensed OneDrive account archival

During the 93-day window, to delete an unlicensed OneDrive account, you need to remove the user from your organization and delete their data. You can use any of the below sources to permanently delete the user:

• Microsoft 365 admin center
• PowerShell
• Microsoft Graph API

Once you delete the unlicensed account, both the Microsoft OneDrive account and its files are moved to the recycle bin.

After 93 days, it will be permanently deleted, and the user is no longer able to sign in to their work or school account.

After the unlicensed OneDrive account archival

An account can be deleted from the archived state without reactivation. However, if the account is subject to a retention policy, the unlicensed account can’t be deleted, and the administrator receives an error mess

Microsoft 365 Archive: associated charges for unlicensed OneDrive Accounts

When OneDrive accounts become unlicensed, there are some costs to be aware of that were not present previously. Here’s what you need to know:

1. Storage Fees: Archived unlicensed accounts now incur a storage fee of $0.05 per GB per month.
2. Reactivation Costs: Reactivating an archived account costs $0.60 per GB, providing 30-day access.
3. Operational Expenses: Managing unlicensed accounts involves additional administrative tasks and costs.
4. Compliance and Security: Properly archiving and billing unlicensed accounts helps mitigate security and compliance risk.

Important Links to refer:

1. https://techcommunity.microsoft.com/blog/onedriveblog/unlicensed-onedrive-user-accounts-what-you-need-to-know/4367835
2. https://learn.microsoft.com/en-us/sharepoint/unlicensed-onedrive-accounts
3. FAQs: https://learn.microsoft.com/en-us/sharepoint/unlicensed-onedrive-accounts#frequently-asked-questions