Expensive Childcare

See How Much More Expensive Childcare Is Than Getting A Higher Education

Unemployment in the U.S. is now hovering around its lowest point in almost half a century, and pretty much anyone who wants a job right now can get one. But here’s one segment of the workforce that may not be experiencing the benefits of growth: new parents. In fact, childcare is so expensive that in many states around the country it costs more than getting a college education.

Q3 hedge fund letters, conference, scoops etc

Expensive Childcare

A new report from Child Aware of America compares the average annual center-based childcare costs for infants across the U.S. with the average annual tuition and fees at public universities. Child Aware of America is a nationwide nonprofit focused on reducing the costs associated with children’s learning in childcare. They relied on their own survey results from January 2018 to calculate childcare costs, and they tapped the College Board Trends in College Pricing for tuition numbers from 2017. We placed these figures on a map to visualize the differences by region, letting you see in a straightforward way the states and regions with the biggest problems in affordability.

Here’s a stunning fact. Dropping your kid off at daycare costs more in 28 states than getting a college education (data was not captured in Montana and South Dakota). The problem is most readily apparent across the Northeast and West Coast. In fact, the state with the highest disparity is Massachusetts, where childcare costs an astonishing $7,683 more on average each year than higher education. California is not far behind with an average difference $6,862. It’s even more expensive in Washington, DC where new parents can expect to spend $23,666 on childcare but only $8,060 on tuition for a public university.

The numbers don’t look as bad across the middle section of the country. College is slightly more expensive than childcare in states like Illinois ($147) and Oklahoma ($88). And the most favorable numbers are clustered around the South in states like Mississippi ($2,681), Arkansas ($1,827) and Louisiana ($1,762).

But even in states where childcare costs less than college, there really isn’t any good news. In truth, these numbers reflect a two-part crisis in affordability. New parents struggle to pay for high-quality childcare just like they face problems for high-quality public education. Keep in mind many parents opt for private childcare that they pay for on their own. The same qualification applies to higher education, where private tuition costs are often much higher than what’s available at a public school. That’s why the IRS provides for several tax-advantaged savings accounts, including the Dependent Care FSA and the 529 Plan. It’s also related to President’s Trump proposal for 6-weeks paid parental leave. And in fact the prohibitive costs associated with childcare are a major reason why some parents decide to stay home with their newborns as opposed to returning to work. And high costs are also a major reason why young people take out massive loans to pay for college, or skip it altogether.

All of this suggests that if you want to start a family and eventually send your kids to college, it’s never too early to start saving.

Data: Table 1.1

Article by HowMuch

Saved Articles

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

Congrats! Are you a smart person?

We have an exclusive targeted & limited time offer for being a sophisticated and loyal reader.

ValueWalkPremium is a website and newsletter on the latest industry news much of which is not in the public domain and obtained via our sources.

We also have 10 years of resources on how to use this information to better your investment process.

Sign up for  today and get our exclusive content for 40% off. This is our second biggest discount ever!!

Use coupon code VIP20 or click on the button below

Limited time offer only ENDS 4/30/2020 or after the next 40 subscribers take advantage whichever comes first – please do not share this discount with others