From Child Care to College, Parents Turn To Loans
With the cost of college education surpassing an average of $31,395 per year, it’s become common for millions of students to take on loans in order to finance their studies. With collective student debt topping $1 trillion nationally, the average college graduate in 2013 is leaving school with $35,200 according to a recent Fidelity survey. It may surprise some parents that new data indicates that parents who send their children to top daycares can expect to accrue similar debts before a child reaches the first grade.
In cities across the U.S., including New York, Boston and Los Angeles, parents are turning to loans and government assistance in order to fund child care, which now averages $4,460-$13,158 per year according to estimates from the National Association of Child Care Resource & Referral Agencies (NACCRRA).
After housing, child care is typically the second most costly expense a parent will have to pay for in the years before a child’s 18th birthday. It’s part of the rapidly increasing costs to raise a child in the U.S. According to the most recent United States Department of Agriculture (USDA) study, it now costs parents an average of $241,081 to raise a child from birth to age 18, not including the cost of a college education.
This occurs as funding for state funded pre-K education programs that help children learn necessary skills before they enter elementary school have been cut. According to the National Institute for Early Education Research, 28 percent of America’s 4-year-olds were enrolled in a state-funded preschool program in the 2011-2012 school year. The Institute claims that funding for these programs has experienced an “unprecedented funding drop of $500 million nationwide.” The recent federal sequestration means that at least 70,000 children will be dropped from pre-K programs next year.
Cost of child care in New York
So what does this mean for parents and how do they get by when child care costs are sky high?
In New York, parents, like college students, are turning to loans in order to cover the costs. CBS New York reported earlier this month that a pilot program, reportedly the first of its kind in the nation, was recently created by the city government to support middle income families.
Here’s how it works. Parents with children aged two to four are eligible to receive loans of $11,000, at a 6 percent interest rate. Applicants must have an annual income of between $80,000 to $200,000, and a credit score of at least 620, according to City Council Speaker Christine Quinn’s office. Applications will have their finances reviewed by financial counselors from the Neighborhood Trust Credit Union, which will administer the loans.
“The way the loan is structured is that it’s interest only while the child is in child care through pre-K and then when they enter kindergarten,” said explained Justine Zinkin of Neighborhood Trust Financial Partners.
“They were maxing out their credit cards, having to get huge interest rates,” said City Council Speaker Christine Quinn.
The National Association of Child Care Resource & Referral Agencies (NACCRRA) reports that New York is on the higher end of day care costs, but is by no means the only city where parents could pay upward of $10,000 per year for regular day care. The NACCRRA reports, “Depending on where you live and the quality of the preschool, average costs range from $4,460 to $13,158 per year ($372 to $1,100 monthly). But in expensive urban areas such as Boston, New York City and San Francisco, the cost for five-day-a-week preschool can soar far higher than those averages, depending on which school you choose.”
Experts in the field that there is also a great deal of variation depending upon the number of children and the services that a family is looking for. “Cost varies greatly from state to state and depend upon a family need, some need five days. We will sometimes work with local groups to help individual families. When we have families who are perhaps struggling with tuition, we certainly reach out to nonprofit partners,” Colleen Moran, a senior communications spokeswoman for Kinder Care, told Mint Press News.
What’s clear is that even for middle to upper income families, the burden has become too much to bear. “That’s just outrageous — 28 [thousand], that’s almost for four years,” said Krohn, of the Upper West Side. “So it was a little bit much, and it seemed impossible.”
The city will take 40 families for the first year of the pilot program, expanding existing coverage already available for lower income families in the five boroughs.
The announcement is a welcome one for families looking to provide the best day care possible for their children. It occurs as more research shows that quality child care from birth to age 5 plays a crucial role in a child’s development and success later in life.
Researchers in the burgeoning field of neuroscience and child development have confirmed this. “By the time a child is 3 years old, 90 percent of their brain has been developed. The implications of the findings from neuroscience, therefore, place a premium on the quality of relationships and learning environments for babies and toddlers,” write researchers for Australia’s Ministerial Council for Education.
“In the past, it was commonly thought that intelligence was 80 percent genetic and 20 percent environmental. Current thinking reverses the balance, that is, it is now thought to be 20 percent genetic and 80 percent environmental with genes and experience being interdependent,” researchers claim citing a 2009 study.
Are lower income children left behind?
If an increasing amount of research points to the fact that quality child care is an important factor in a child’s education, what are lower income families doing to keep up? Some industry experts claim that there are far fewer options available to lower income families.
“Costly services are making day care unaffordable for some low-income families,” said Michelle McCready, a senior policy adviser with Child Care Aware of America to Bloomberg news. Those families rely on unregulated facilities or relatives to care for children, or in some cases give up jobs to raise them, she said.
When contacted for comment, Child Care Aware of American offered Mint Press News the following written statement: “Nearly 11 million children under age 5 are in some type of child care setting for an average of 35 hours each week. Child care in too many communities today is hard to find, difficult to afford and of unknown quality. From community to community, the high cost of child care is a struggle for most families, not just low income families. Yet, access to affordable child care is essential for a strong economy.”
Most major cities, including New York, Seattle and San Francisco offer subsidies for lower income families, but the Census Data reveals that millions of children from lower income families are in informal child care
In a typical week during the spring of 2011, the last time data were available, there were 12.5 million — 61 percent of the 20.4 million children under 5 years of age — in some type of regular child care arrangement.
The Census shows that 23.7 percent of the 20.4 million children under the age of 5 are receiving care from a grandparent in homes where at least one parent has to work.
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