We have been able to resolve this with the help of MS premier support. Try the following (the csv has one column with a heading of UserPrincipalName and each users upn following on a new line each). Also replace xxxxxxxx with your tenant name.
Code:
$filePath = "d:\upn.csv"
Import-Csv $filePath | ForEach {
$upn = $_.
$O365PP = New-MsolLicenseOptions -AccountSkuId Xxxxxxxxxxx:OFFICESUBSCRIPTION_STUDENT -DisabledPlans ONEDRIVESTANDARD
write-host "assigning license for $upn ..." -foregroundcolor magenta
Set-MsolUser -UserPrincipalName $upn -UsageLocation AU
Set-MsolUserLicense -UserPrincipalName $upn -AddLicenses Xxxxxxxxxxx:OFFICESUBSCRIPTION_STUDENT -LicenseOptions $O365PP
}