How to budget and manage your child’s school fees

Twice or thrice a year, parents across the country prepare for the inevitable—school fees, which take up a massive chunk of households’ earnings.

Whether the child is in pre-school, high school, or even university, many households do this as they struggle to meet basic needs amid reports of low inflation rates.

Early last year, Anthony and Sarah’s firstborn, Jayden, joined primary school in Nairobi. The KSh30,000 termly fee initially felt manageable, but a year later, upon their second child joining pre-primary, school fees became the family’s most significant financial concern.

Like many Kenyan parents, Anthony and Sarah have learnt that paying school fees is not a one-time cost, but a regular exercise.     

Last week, when schools reopened for the second term, the couple opted to pay fees in instalments, paying half of the amount and clearing the balance by the end of the month. This is not unique to Anthony and his wife, but it’s a common practice across the country as many parents struggle to afford school fees, often leading to financial hardship and, in some cases, students drop out of school.

This has been compounded by factors such as rising cost of living, extra levies imposed by some schools, and inconsistent government funding.

A recent report by WorldRemit indicated that the education cost for most households in Kenya is at 1,054.31 per cent, or approximately 10 times their average monthly household income. In addition, with the rising cost of living and numerous priorities, planning for a child’s education is challenging, despite the Kenya National Bureau of Statistics (KNBS) indicating that the year-on-year inflation for 2024 eased to 4.5 percent from 7.7 percent in 2023.

Financial experts recommend that starting early and planning strategically can create a safety net to cover some costs without impacting daily finances. “Saving up for school fees is very similar to saving up for retirement. You build up the funds over a period of time and then gradually draw down on them,” they advise.  

According to financial experts, planning for tuition fees throughout a child’s school life requires a mix of financial strategies. They include:

• Understanding the cost involved
• Creating a dedicated education fund
• Starting to save early and saving consistently
• Exploring scholarships and financial aid
• Regularly reassessing your financial plan

Opening a dedicated education account in a bank or a Money Market Fund (MMF) is one strategy. However, money market funds offer better returns than regular savings accounts, and they are easily accessible and have low risk.

Various banks and insurance companies offer education policies that enable parents or guardians to set aside as little as KSh 2,000 per month and receive a lump sum payment upon the policy’s completion.

Education policies, especially endowment insurance plans, which combine savings and insurance, are considered a better option. Such policies guarantee benefits and consider inflation-linked returns.

“NCBA’s Go Educator is an education policy we have developed to enable you to meet the education expenses of your child. It is designed to enable a parent or guardian to put aside as little as KSh2,000 monthly and receive a lump sum payment at the end of the policy term,” NCBA Bank said in a statement.

For NCBA, the Go Educator policy also allows one to save for an asset, venture or financial goal, not limited to education, thereby making this a very flexible solution for anyone who wishes to save for the future. It also allows one to generate, grow and protect their wealth, as they nurture their dreams. Further, it gives 15 percent tax relief on the monthly premium up to a maximum of KSh5,000.

In addition, school fees loans offered by Saccos are another option, as many Saccos offer low-interest education loans.