TB doesn't support multi-factor authentication and needs an SMTP server to send email. Please contact your school's IT administrator for information as to how it might be achieved.

My IT Dept refuses to activate it citing security risks, is implementing this something that's achievable for third party clients? Google's Gmail works fine with this.

Gmail is not an offline client.

Is there a plugin for this?

If you have other Micosoft account(s), then you may find that school account is added as an alias. Assuming it has been added to Microsoft account and you have another email address in Microsoft.... Whatever account eg: an outlook.com email address is set up as Primary then Microsoft allows sending via whatever is set up as Primary. All alias email addresses in Microsoft account need to use same password as used to access webmail/micosoft account.

So you may be able to create a school mail account in Thunderbird using Authentication Method: Oauth using webmail password, but will need to manually set the SMTP to use the eg: outlook.com email address. But I would advise also setting the Account Settings Reply-to email address as the school email address. So replies go to correct school address.

I cannot guarantee the above will work as i'm not sure of your specific set up or whethr you have other Microsft accounts.

However, there is another alterative which should work for you.

If school admin have disabled IMAP, POP and SMTP then you could try this addon: https://addons.thunderbird.net/en-us/thunderbird/addon/owl-for-exchange/

It is a paid for addon but at a very small price. Maye a couple of coffees per annum ! The addon allows you to use your Exchange and Office365 email account using Outlook Web Access (OWA) with Thunderbird.

Thank you for giving a genuinely helpful answer! I tried the alias solution, but unfortunately I don't think my school allows this either, but Owl works perfectly fine, I'm happy to pay the small price for it!