Last reviewed: 25 October 2026
Parents who want to put money aside for school fees in Kenya usually choose between three routes: an ordinary or fixed-deposit savings account, a money market fund, or an education plan sold by a life insurer. Each one handles access to your money, returns, protection and discipline differently. This guide compares them side by side so you can pick the one that fits your child’s timeline and your income.
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Route 1: A savings account or fixed deposit
The simplest option is a dedicated bank account you never touch except for fees. A fixed deposit locks money away for an agreed term at an agreed rate, and the interest is taxed at source. The Kenya Revenue Authority’s withholding tax guide lists a 15% rate on interest paid to residents, and for individuals that tax is final. The upside is full flexibility and no long contract. The downside is that it is just as easy to raid the account in a tight month, and there is no protection if the earner dies.
Route 2: A money market fund
Money market funds pool savers’ money into short-term, low-risk investments. Many accept small monthly top-ups by M-Pesa and let you withdraw within days. Returns change with interest rates and are not guaranteed, but they have often beaten ordinary savings accounts. Check that the fund manager is licensed by the Capital Markets Authority. A fund gives you flexibility and growth but, like a bank account, no insurance and no forced discipline.
Route 3: An education plan from an insurer
An education plan combines saving with life cover. You commit to premiums for a fixed term. If you die or become permanently disabled, the insurer pays the remaining premiums and the child still gets the payouts. Jubilee’s Smart Scholar starts at KES 2,000 a month over 8 to 18 years. Britam’s Msingi Poa pays four guaranteed payouts in the last four years of the policy. Investment-linked versions add fund growth: Britam’s Soma Sure brochure states a minimum guaranteed net return of 5% a year at maturity, a 0.25% monthly management fee on the fund, and early-exit charges of 5% in the first year and 3% in the second.
Side-by-side comparison
| Feature | Savings account / fixed deposit | Money market fund | Education plan |
|---|---|---|---|
| Access to money | Anytime (fixed deposit: at maturity) | Usually within days | Limited; early exit costs money |
| Returns | Stated interest rate | Variable, not guaranteed | Guaranteed payouts or fund value, depending on plan |
| Cover if the parent dies | None | None | Premiums waived, payouts continue |
| Discipline | Low | Low to medium | High: contractual premiums |
| Tax | Withholding tax on interest | Withholding tax on earnings | Insurance relief may apply on qualifying policies |
| Best for | Short gaps, emergency fund | Goals 1 to 5 years away | Goals 8+ years away, sole earners |
How to choose
Start with the timeline. If your child joins senior school in two years, a long insurance contract will not mature in time. A money market fund or fixed deposit fits better. If your child is in pre-primary and you are thinking about university, a plan of 10 years or more can work, and that is also the term at which Britam says the 15% insurance relief (capped at KES 60,000 a year) applies.
Next, look at who depends on your income. If one parent’s salary pays all the fees, the waiver-of-premium cover in an education plan has real value. If both parents earn and already hold life cover, the extra protection matters less, and the higher flexibility and lower charges of a fund may win.
Finally, be honest about discipline. Many parents choose an education plan precisely because they cannot easily withdraw the money. That rigidity is a feature, but only if you are sure you can keep up the premiums. Lapsing early is the most expensive outcome of all.
A mixed approach
Many families combine routes: a money market fund for the next one or two years of fees, plus an education plan for university. Whatever you pick, set up an automatic monthly transfer on payday and track progress against real fee figures. Our school fees tracker and education insurance guide can help.
This comparison is general information, not financial advice. Figures are as published by the providers in October 2026.