Report: Day Care Costs Rivals That of College

Child Care of America says day care can cost more than housing, food

report: day care costs more than college
A new report finds that in some states, day care costs more than college. undefined

It's no surprise that quality, affordable day care is something that families spend a lot of money on. But a recent report from Child Care Aware of America is really putting the expense of day care in context against what parents and caregivers earn.

According to Parents and the High Cost of Child Care: 2014 Report, the average cost of childcare can cost more than what families spend on housing, college tuition, food, and transportation.

But these high costs aren't the only reason why the high cost of child care can be devastating for families. When families can't afford child care (the average annual cost of center-based care for an infant is nearly half of the income of a family of three who are living at the poverty level), lots of other things suffer. When good child care options aren't available, many employees choose to stay home from work (twenty-nine percent of respondents say they had some kind of child care "breakdown" in the past three months), which costs businesses $3 billion annually in the U.S.

“Quality, affordable child care provides critical support to our nation’s workforce and is one of the earliest learning settings our children will enter,” said Lynette Fraga, Ph.D., executive director of Child Care Aware of America. “It’s time to address the disparity between high child care costs and low provider wages, and find a solution to what has become a crisis.”

Key findings from the report include:

  • The cost of full-time center-based care for two children is the highest single household expense in the Northeast, Midwest, and South. In the West, the cost of child care for two children is surpassed only by the cost of housing in the average family budget.
  • The cost of child care for two children exceeded housing costs for homeowners with a mortgage in 23 states and the District of Columbia.
  • Center-based child care fees for an infant exceeded annual median rent payments in 22 states and the District of Columbia.
  • Child care fees for two children (an infant and a 4-year-old) in a child care center exceeded annual median rent payments in every state.
  • In every region of the United States, average child care fees for an infant in a child care center were higher than the average amount that families spent on food.
  • In 2013, in 30 states and the District of Columbia, the average annual average cost for an infant in center-based care was higher than a year’s tuition and fees at a four-year public college.
  • Even the annual average cost of care for a 4-year-old, which is less expensive than care for an infant, was higher than public college costs in 20 states and the District of Columbia.

The 10 least-affordable states in 2013 for center-based care based on the cost of child care as a percentage of state median income for a two-parent family (in ranked order):

For full-time center-based infant care: New York, Colorado, Oregon, Minnesota, Massachusetts, Washington, Illinois, Nevada, California, and Kansas.

For full-time center-based care for a 4-year-old: New York, Vermont, Oregon, Nevada, Minnesota, Colorado, Wisconsin, Massachusetts, Rhode Island, and Maine.

And while child care costs take up a big chunk of a family's budget, child care providers are one of the lowest paid professionals, making on average, just $21,409 per year.

Child Care Aware of America has made a host of recommendations to help ease the burden and fix the problem, including:

  • Starting a national discussion about the impact of the high cost of child care and the cost of quality in child care. This conversation should explore federal and state options; innovative, low-cost solutions that have shown success; what has worked in other industries; and what models currently exist within communities that have seen success.
  • Asking congress to review and consider what policy options are available to help families offset the rising cost of child care, including, but not limited to raising dependent care limits for deductions or providing additional tax credits for families and providers, public- private partnerships and to look to existing state’s with successful financing models. In addition, asking Congress to require the National Academy of Sciences to produce a study on the true cost of quality child care and to offer recommendations to Congress for financing that supports families in accessing affordable, quality child care.
  • Implore federal and state governments to commit to investing in early care and education programs, especially considering the recent historical progress at the federal level towards ensuring all children in low-income, working families have access to affordable, quality child care.

Those are good solutions for the long-term. But what about families who need help now?

Figure out a budget: The best time to start budgeting for day care? When you find out you are expecting. But if you are long past that point, there are still things you can do to maximize your day care dollars. Make sure you are getting child care that meets your families needs. Are you paying for full-time child care but you really could make do with part-time? Would switching to an in-home child care make sense? Re-evaluating your child care once a year could help you discover hidden savings.

Evaluate your work situation: If child care costs are eating a lot of your budget, sit down with your partner or spouse and figure out if it would make sense for one parent to stop working or cut back on their hours. Amazingly enough, many families discover that if one parent stops working, while it appears the family will take a financial hit, not having to pay costs associated with working -- child care, commuting, purchasing work clothing, etc. -- actually works out to benefit the family. If you decide to explore this option however, consider the long term ramifications of what it will do to your career. Eventually you may want to re-enter the workforce. Will leaving now be a detriment to your career down the line? There are lots of things to consider.

Ask for help, and offer your own. Are there other families in your neighborhood or in your child's school in the same boat? Talk to other parents in your parenting network about how you can work together to save on childcare costs. Maybe one mom is off on Wednesdays and you are off on Thursdays. If you are both willing to watch one another's children on those days, you could both save on your child care. Start the conversation, you never know.

Look into tax credits. There is a Child and Dependent Care Tax credit that is up to 35% or up to $3,000 in qualifying expenses that can go towards a child's care under 13 while you are working ($6,000 for two children). It is based on your adjusted income. Talk to your accountant or tax preparer for more information.

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