Guide to Child Care Options and Financial Aid

Most parents need child care at some point, but deciding who will care for your child can be complicated and personal. On top of that, cost is a leading factor that influences available options when choosing child care.

Although child care can be expensive, resources and financial aid programs are available to help manage the costs. By understanding these options and resources, assessing family needs and using a structured approach, you can choose the best care provider that works for your family while making it affordable.

In 2022, the annual median child care price for one child ranged from $5,357 to $17,171, depending on provider type, children's age and county population size, according to the Women's Bureau National Database of Childcare Prices. Washington, D.C., is the most expensive state for child care, with parents paying $24,243 annually for preschool, infant care and daycare, based on the Census Bureau calculation using data from the Economic Policy Institute. Massachusetts follows with $20,913 and California with $16,945.

Child care is one of the top expenses for new parents and varies considerably by different factors. It consumes a significant percentage of family income, particularly for families who need to pay for care for multiple children. Below are the annual average child care costs by the child's age and county population size.

Source: Women's Bureau, U.S. Department of Labor Note: Prices are shown in 2022 dollars, adjusted using the Consumer Price Index for All Urban Consumers (CPI-U) for child care.

Child care options include daycare centers, in-home daycares, preschool and hiring a nanny. Many families use a combination of these child care choices and nontraditional options. Each option has its own pros, cons and costs. Consider your needs and find an option that fits your child and budget. Below are some child care options and their costs based on Care.com’s 2024 Cost of Care Report.

Cost: $321 per week, on average, for one child. Depending on location and other factors, that price may be more or less.

Daycare centers provide a structured, formal setting for children ages six weeks to six years old while their parents are at work or occupied with other responsibilities. They are ideal for socializing children with peers, providing full-time care for working parents, serving as a backup care option and preparing children for kindergarten and school. The state licenses these centers, so they must meet health and safety regulations to operate.

Cost: $230 per week on average.

In-home daycare, also known as family child care homes, provides care for small groups of children in the provider's home. This option is ideal for parents who want siblings to stay together, can't afford a full-time nanny or need flexible full-time care.

Unlike daycare centers, in-home daycares typically operate with fewer regulations and may not have a set curriculum, focusing on a safe and nurturing environment. These care providers should be licensed by the state and meet local safety requirements. Ask about the staff-to-child ratio and confirm that all adults in the home have had recent background checks.

Cost: Varies widely, depending on school and location. For example, the annual average cost of private preschool is $12,753 in New Jersey and $9,697 in Florida.

Preschool is an early childhood education program for 3- and 4-year-olds, ideal for school readiness, socialization and families needing part-time, licensed care. Unlike daycare, preschool typically offers half- or full-day options, which may not suit parents working regular business hours. Some states provide free preschool and pre-kindergarten programs for children transitioning to kindergarten.

Cost: $12 to $20 per hour, depending on location and experience.

Babysitters provide short-term, flexible child care on an as-needed basis. They are ideal for families with school-aged children needing part-time, after-school care. They can pick up children from school, take them to activities and cover the gap between the end of the school day and the end of the workday.

Babysitters are perfect for parents wanting individualized care at home, families not needing full-time care and for coverage during date nights or part-time after-school hours. They are generally paid hourly, with rates varying by location. Coastal and urban areas pay more than midwestern and rural areas. Conduct a background check if your babysitter is an adult and will visit frequently.

Cost: $766 a week, on average, though it may vary based on factors such as experience, location and the number of children.

Hiring a nanny offers personalized, hands-on child care in your home, providing convenience and flexibility. A nanny can manage all aspects of child care, from carpooling and coordinating activities to meal preparation and nurturing development. Nannies are ideal for parents seeking individualized at-home care, especially for babies and families with the financial means to afford this option.

Unlike babysitters, nannies often have more training and follow a structured, long-term schedule. Education and training levels vary, so set clear expectations, including time off, overtime and duties beyond child care. First aid training and a background check are important for safety.

Cost: $401 a week plus room and board. Host families also pay program fees (around $10,000/year), a $500 education allowance and registration and other fees, which vary by agency.

An au pair is a young adult aged 18 to 26 from another country who provides live-in child care assistance to an American host family. Unlike a nanny, an au pair offers cultural diversity and a unique child care experience. They provide flexibility and personalized care, making them ideal for families seeking cultural immersion. However, au pairs are not professional caregivers; the primary focus is cultural exchange.

The U.S. State Department oversees the J-1 au pair program, requiring host families to provide room, board and a stipend. It requires host families to supply room and board as well as a stipend. Care providers must hold a J-1 visa and work with an approved program. If you are considering an au pair, it's best to work with a licensed agency that understands the U.S. requirements and adheres to strict standards.

If you will need child care, take financial steps before your child arrives by making a plan. You can also look for ways to cut your costs through assistance programs from employers, schools and the government.

Families have several options for financial aid to help cover child care costs, provided they meet the eligibility criteria. These aids come from various sources, including government programs, state resources and local initiatives, all aimed at making child care more affordable. Below are some of the financial aid options available to families.

The government provides several child care assistance programs to support families cover costs. One of these is the Child Care and Development Fund (CCDF), which offers subsidies to low-income families for child care expenses. Each state manages its own CCDF program, and eligibility requirements can vary. Still, the primary goal is to assist families in need while they work, search for employment or attend training.

Another program that helps with paying for child care is Head Start and Early Head Start. These programs are designed to prepare children for school, covering kids from birth to five years old. Eligibility is based on income and is limited to families at or below the federal government's poverty level.

Many states offer financial assistance programs to subsidize child care for families with low incomes. These subsidies enable parents to have their children cared for while earning money to provide for their families. These programs vary by state and include vouchers, fee assistance and other program names.

To find help paying for child care, look for resources near you. Each state has a website dedicated to helping families find quality child care and financial assistance programs. Use the following table to find your state's child care resource website.

Military members and veterans may be eligible for Department of Defense (DoD) fee assistance. This assistance is customized to each service branch and managed by Child Care Aware. The DoD has recently adjusted child care fees to reduce the burden on lower-income families and increased the fee assistance cap to $1,800 per child monthly. Service members can also enroll in Dependent Care Flexible Spending Accounts (DCFSAs) to set aside up to $5,000 in pre-tax earnings for dependent care expenses.

Many states offer pre-kindergarten programs for children aged three to five, focusing on school readiness. These programs are often available in half-day and full-day formats and may be low-cost or free, making them accessible to families from various income levels. Depending on your state, they may offer both half-day or full-day programs at a low cost or even free. Eligibility may be open to all income levels, so check availability in your state.

If you are a high school student and a new parent, there are child care assistance programs designed to help you continue your education. These programs vary by state and can include on-site child care at schools or financial aid for external child care services. Contact your local Child Care Aware Resource and Referral agency to find available resources in your area. They can provide detailed information on the programs and subsidies available to support teen parents in your state.

Many colleges offer on-site child care programs for faculty, staff and students. These programs provide a convenient option for student parents, enabling them to focus on their studies while ensuring their children receive quality care. Although these programs typically require payment, discounts and subsidies are often available to make them more affordable. One prominent initiative is the Child Care Access Means Parents in School (CCAMPIS) program, which provides grants to institutions of higher education to support campus-based child care services for student parents with low incomes.

Scholarships can significantly reduce the cost of child care, making it more accessible for families in need. One of the scholarships is the Santa Barbara Foundation, which offers child care scholarships through the William and Lottie Daniel Fund to support working families needing quality child care. These scholarships help cover the costs associated with child care, ensuring that children have access to early education and development opportunities. Families must meet income and other eligibility criteria to qualify for these scholarships.

Although financial aid and subsidies can significantly reduce the cost of child care, some families may still need to explore other payment options. Private payment methods offer various ways to manage and reduce the expenses associated with child care. These options include tax credits, flexible spending accounts, employer assistance programs and sliding scale fees.

The Child and Dependent Care Tax Credit (CDCTC) allows parents to claim a tax credit for a portion of their child care expenses. This credit is available to families who pay for child care to work or look for work. The credit can cover up to 35% of qualifying expenses, depending on income, with a maximum of $3,000 for one child or $6,000 for two or more children. This means the maximum credit is $1,050 for one dependent and $2,100 for two or more dependents. Consult the IRS website or a tax professional​ for detailed information and eligibility criteria.

A Dependent Care Flexible Spending Account (FSA) allows parents to set aside pre-tax dollars to pay for eligible child care expenses. This account can cover up to $5,000 per year for families, reducing taxable income and ultimately saving money. Employers typically offer Dependent Care FSAs as part of their benefits package, so check with your HR department for specific details and enrollment periods​.

Many employers offer child care assistance programs to support their employees. These programs can include on-site child care facilities, partnerships with local child care providers offering discounted rates or direct financial assistance for child care expenses. Some employers also provide access to Dependent Care FSAs. Inquire with your employer about available child care benefits.

Some child care providers offer sliding scale fees based on a family's income. This means the cost of child care is adjusted according to what the family can afford. Sliding scale fees make child care more accessible to families with varying income levels. To find providers offering sliding scale fees, check with your local CCR&R agency​​.

Many alternative sources of child care are available beyond traditional centers, nannies and family members. Not all of these options are available across the country and to all income levels, but they are worth exploring as you research the choices near you.

Deciding on child care can be overwhelming and stressful. MoneyGeek reached out to an early childhood development professional and a financial advisor for advice on balancing the necessity of quality child care with affordability.

Below are some additional valuable resources on child care to explore:

• American Academy of Pediatrics (AAP): Offers guidelines and resources on child development, health and safety in child care settings and choosing quality child care.
• Child Care Aware of America: Supplies information on finding quality child care, understanding your options and financial assistance programs available in your area. It also offers resources for child care providers.
• National Association for the Education of Young Children (NAEYC): Provides resources for parents and educators on early childhood education standards, accreditation for child care centers, and tips on choosing quality child care.
• National Resource Center for Health and Safety in Child Care and Early Education: Provides guidelines and standards for health and safety in child care settings, helping parents ensure their child care provider meets requirements.
• U.S. Department of Health and Human Services (HHS): Offers extensive information on Head Start and Early Head Start programs, child care subsidies and health and safety standards for child care providers. Their website is a valuable resource for federal child care assistance programs.