There was a time when saving for college was the biggest educational burden for parents. Not anymore. According to a report from think tank New America, the average yearly cost of daycare is more than in-state college tuition. So, basically, it costs more for your 3-year-old to play with blocks and sing nursery rhymes all day than for a freshman to take Psych 101 and Intro to Chemistry.
Unbelievable, right? If only collective outrage was the biggest issue with those figures. Unfortunately, U.S. parents are going broke trying to pay for it. Nearly one-third of the families who have a fee for childcare say it has caused major financial problems for their households, according to a new poll by the Robert Wood Johnson Foundation, the Harvard T.H. Chan School of Public Health and NPR.
In Kentucky, Montana, Oregon and Wisconsin, daycare fees are more than rent. And in Idaho, Illinois, Iowa, Kansas, Massachusetts, Michigan, Minnesota, Ohio, South Dakota, Vermont, Washington, the cost is more than 90 percent of the rent. It's worse in West Virginia and Mississippi where having someone care for your children takes up 40 to 45 percent of your income. It begs the question: How exactly do families afford it? It certainly isn't easy. It requires major cost-cutting. That means not even considering family vacations or even outings to the movies in order to squeeze by each month. Bottom line is, there is no room for frills.
That flies in the face of the U.S. Department of Health and Human Services claim that affordable care should amount to just 10 percent of family income. NPR profiled families struggling with childcare costs, including a Wisconsin couple that spends nearly $2,000 a month for their 3-year-old and 4-month-old. That's 34 percent of their household income. By comparison, rent is just 25 percent of their monthly income.
Those steep costs means sacrificing other things, such as putting money toward retirement, getting cable or top-of-the-line smartphones and only going out for meals on rare occasions.
"We don't have enough in the budget to save anything for their college," said the mom. "I'm basically paying for it right now."
They would like to have one more child, but are hesitant for financial reasons. With three, daycare costs will exceed what she earns. Now they think they'll wait until she can take a year off work or their oldest child starts elementary school.
Sadly, their story is far from unique. Many families are struggling every day. Even flexible spending accounts—which allow employees to set aside up to $5,000 pre-tax dollars a year for children care —does little to stem the burden. Relief, however, will come when the kids reach public preschool age. Until then, the best way to survive is to create a budget and stick with it, said a Cincinnati mom of three who was profiled for the NPR series.
"There's always going to be something that pops up, but if you've got a plan in place, you know how the numbers will fall," she added. "And it is a comfort at night when you can go to bed and say, 'OK, at least I know I can afford my house, my kids in a safe place, the utilities and groceries. Everything else? Not that important.'"