Here’s why childcare is getting more unaffordable and forcing families to make ‘heartbreaking choices’
The affordability crisis hitting consumers has not spared childcare providers, further adding to the financial burden on families.
According to a survey last month from the National Association for the Education of Young Children (NAEYC), the cost pressures are similar to what’s giving sticker shock to many Americans.
For example, 68% saw liability insurance costs increase in 2025, up from 46% in 2024, and 66% saw property insurance hikes versus 45% a year earlier. And like many renters, 44% of childcare providers saw rent or lease costs rise, up from 32%. They are also facing more wage pressure as well as higher expenses for food, supplies, and facility maintenance—all while public funding is down.
“When these costs rise without a simultaneous increase in public funding to fill the gap, programs are faced with difficult decisions,” the report said. “They can either take on the costs themselves, risking their business stability given already low operating margins, or pass them on to families in the form of higher tuition jeopardizing enrollment if families can no longer afford care.”
A majority of programs have raised tuition to cover the growing expenses, with 65% of childcare centers and 51% of public school-based programs reporting increases. Meanwhile, just 31% of home-based childcare providers hiked tuition.
But families are also experiencing similar increases in essentials, like housing costs, insurance rates, food, and electricity. The U.S. war on Iran has also sent gasoline prices soaring over the past week. Something has got to give, meaning parents must make a stomach-churning sacrifice somewhere.
“As a child care provider, I see firsthand how unaffordable childcare is forcing families into heartbreaking choices. I hear parents tell me they want safe, licensed care but simply cannot afford it,” the owner/operator of a home-based center in New York said in the survey. “At the same time, providers like me are doing everything we can to keep our doors open while operating on razor-thin margins, absorbing rising costs, and trying to serve families who desperately need us.”
Care providers make difficult choices too. One owner of a home-based program in Indiana told NAEYC that they sometimes work for free to cover copays that parents can’t afford.
Facing financial limits among parents, childcare centers are limited themselves in how much they can hike tuition before wiping out demand. That affects their ability to recruit and retain employees.
According to the survey, more than half of program leaders either can’t afford the compensation needed for qualified staff or currently don’t have enough qualified staff, who are also feeling the strain.
“The uncertainty and instability have made it harder to focus fully on my work. Financially, I’m constantly worried about making rent and affording groceries, which distracts me during the day,” an early childhood educator in California told NAEYC. “At work, the fear of program cuts or reduced hours means I’m always stressed about job security, and this burnout makes it harder to engage with the children as fully as I want to.”
Research has shown that underfunded childcare, especially as part of efforts to offer universal coverage in the early years, can actually harm children over time.
Meanwhile, childcare is already sliding out of reach for many. A separate LendingTree study in January found that the average American family doesn’t come close to having enough income to comfortably afford childcare.
Federal guidelines say that childcare is affordable if it consumes no more than 7% of household income. Citing data from Child Care Aware of America, LendingTree found that the average annual cost of care for an infant and a 4-year-old is $28,190 nationwide.
That would require household income of $402,708 a year to meet the 7% benchmark. But the average two-child household earns an average of $145,656, meaning the typical family would need a 176.5% pay hike to reach the affordability threshold.
“With numbers like these, it’s easy to see why birth rates are falling. Many Americans are saying that having kids doesn’t make financial sense,” said Matt Schulz, LendingTree’s chief consumer finance analyst. “It’s going to require concerted effort on the part of our political and business leaders to change the state of childcare costs here in our country, but that change isn’t coming anytime soon.”
This story was originally featured on Fortune.com