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Unfixable problem with 365 users, AD sync and changing passwords

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We have 365 E2, through the generosity of the MS donation program for non-profits. It's an awesome product and overjoyed to have it.

There's this problem though, the MS IT (including their back end folks) can't seem to solve. At some point this summer, after an experiment with Azure AD sync and write-back, all the users who had accounts at that time got stuck with an inability to change (not reset) their own passwords. I've been assuming it was a side effect of password write-back but who knows?

Since we are a union environment, I prefer allow the option to let end users pick their own passwords, but all user accounts that synced in past between AAD and my local forest now get a message on 365 when they try to change their passwords, which says the administrator (that's me) won't allow it. It even affects the master/global admin account...


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