The broader economic affordability crisis has reached childcare providers, intensifying the financial strain on families.
Data from the National Association for the Education of Young Children (NAEYC) indicates that childcare facilities are facing cost pressures similar to those impacting consumers nationwide.
For instance, 68% of providers reported an increase in liability insurance premiums in 2025, up from 46% in 2024, while 66% experienced property insurance hikes compared to 45% the previous year. Mirroring trends in the rental market, 44% of providers saw their rent or lease expenses climb, an increase from 32%. These facilities are also grappling with rising costs for food, supplies, and maintenance, alongside mounting wage demands, all while public funding remains stagnant or in decline.
“When these costs rise without a corresponding boost in public funding to bridge the gap, programs are forced into difficult choices,” the report noted. “They must either absorb the costs themselves—risking business viability due to already thin profit margins—or pass the burden to families through tuition hikes, which threatens enrollment if families can no longer afford the service.”
A majority of programs have increased tuition to offset these rising expenses, with 65% of childcare centers and 51% of public school-based programs reporting such hikes. In contrast, only 31% of home-based providers have raised their rates.
Families are simultaneously struggling with the rising cost of essentials, including housing, insurance, food, and utilities. Furthermore, the U.S. conflict with Iran has driven gasoline prices up over the past week. As these pressures mount, parents are increasingly forced to make difficult financial sacrifices.
“As a childcare provider, I see firsthand how the lack of affordability forces families into heartbreaking decisions. I hear from parents who want safe, licensed care but simply cannot afford it,” a New York-based home childcare owner stated in the survey. “At the same time, providers like me are doing everything possible to stay open, operating on razor-thin margins while absorbing higher costs and trying to support families who rely on us.”
Providers are also making tough sacrifices; one Indiana-based home program owner told the NAEYC that they sometimes work without pay to cover the copays that parents are unable to meet.
Because parents are reaching their financial limits, childcare centers have little room to raise tuition further without causing a drop in demand, which in turn hinders their ability to attract and retain staff.
According to the survey, over half of program leaders report that they either cannot afford to pay competitive wages for qualified staff or are currently facing a shortage of such personnel, who are also feeling the pressure.
“The instability makes it difficult to focus on my work. I am constantly worried about paying rent and buying groceries, which is a distraction during the day,” an early childhood educator in California shared with the NAEYC. “At work, the fear of budget cuts or reduced hours keeps me stressed about job security, and this burnout makes it harder to engage with the children as fully as I would like.”
Research indicates that instability in care, particularly when it disrupts efforts to provide universal early childhood coverage, can have negative long-term effects on children.
Meanwhile, childcare is becoming increasingly inaccessible. A separate study in January revealed that the average American family lacks the income required to afford childcare comfortably.
Federal guidelines suggest that childcare is affordable if it accounts for no more than 7% of a household’s income. Citing data from Child Care Aware of America, LendingTree found that the average annual cost for an infant and a 4-year-old is $28,190 nationwide.
Meeting the 7% benchmark would require an annual household income of $402,708. However, with the average two-child household earning $145,656, the typical family would need a 176.5% pay increase to reach that level of affordability.
“Given these figures, it is easy to see why birth rates are declining. Many Americans feel that having children is not financially viable,” said Matt Schulz, chief consumer finance analyst at LendingTree. “It will take a concerted effort from our political and business leaders to improve the state of childcare costs in this country, but that change is not on the immediate horizon.”