Daycare Is So Expensive In New York That Parents Can Now Take Out Loans To Fund It

There are few places where parents spend as much as New Yorkers do to educate kids who are barely on solid foods yet.

Childcare in New York City costs upwards of $US13,000 a year (the highest in the country) and private pre-k classes can run more than $US30,000 a year.

For parents who can’t afford the private route, public programs aren’t necessarily an alternative. In 2011, more than 28,000 applicants vied for just 19,800 pre-k slots in the city’s public schools, according to the New York Times.

A controversial new initiative by City Council Speaker and mayoral candidate Christine Quinn could help to change that.

Quinn is rolling out a pilot program that would offer low-interest loans to middle-class families with young kids for daycare, the New York Post’s Beth Defalco reports.

The loans will be doled out by Neighbourhood Trust Financial Partners, a local credit union that already offers a wealth of free financial services to city residents. For program’s first year, 40 6% interest loans will be up for grabs for families with children between 2 and 4 years old.

In order to qualify, families must earn between $US80,000 and $US200,000/year, have a 620 minimum credit score, and sign up for a free financial counseling appointment with Neighbourhood Trust.

The loans will work a lot like college financial aid, disbursed directly from the lender to the childcare providers.

But are they really worth the trouble?

Slate’s Matthew Yglesias argues against the program:

“Day care lending … has basically none of the features that make college tuition loans seem attractive. Being able to get a loan for your 3-year-old to get some child care doesn’t in any clear way increase your income three, five, or 10 years down the road. For lots of hard-pressed New York families, a loan like this is going to be a great lifeline out of a difficult situation. But down the road, you’re going to end up with a new set of difficult situations as people struggle to repay the loans. Whether this goes wrong in the form of large losses that the city somehow has to cover or a huge burden of payments on families is going to depend on the precise details, but either way you’re asking for trouble.”

On the other hand, there’s no denying the fact that early childhood education plays a vital role in social and economic mobility — especially for low-income children.

By the time they hit kindergarten, children from the highest earning households score twice as well as poor kids on literacy and maths tests, according to a recent Pew study. And since 1970, the achievement gap between low- and high-income children has grown to 70%.

But we’ve got to admit, we’re with Yglesias on this one. The answer to filling that gap probably isn’t tying up parents up in five-figure loan debt that they may not even pay off until their kids reach high school. Make pre-k available to any and every family in New York and then, we might be in business.

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