Cost of Care vs. Tuition
The gap between the true cost of providing quality childcare and the tuition that families are able to pay.
The true cost of providing quality childcare is systematically higher than the tuition most families can afford, creating a structural gap that explains why childcare is simultaneously unaffordable for families and unprofitable for providers. The Center for American Progress and the U.S. Department of Labor have published cost modeling tools that calculate the true cost of care including teacher wages at living-wage levels, benefits, administration, facilities, insurance, food, supplies, and reasonable reserves. These models consistently show that the true cost of infant center-based care at a 1:4 ratio with bachelor-degree teachers earning $20 per hour plus benefits is approximately $20,000 to $25,000 per year per child in most U.S. markets, significantly higher than the $15,000 median tuition reported in the DOL National Database of Childcare Prices. The gap is closed primarily by suppressing teacher wages (median childcare worker wages are approximately $13 per hour, roughly half of kindergarten teacher wages despite similar credentials), charging higher tuition for preschoolers to cross-subsidize infant care (where ratios are stricter and losses are greatest), minimal benefits, and deferred investment in facilities. The "cost of care" framing has emerged as a counterweight to the traditional "market rate" approach to setting CCDF reimbursement rates, which uses survey data on what providers actually charge rather than what it would cost to provide high-quality care with fair wages. The 2024 federal CCDF final rule explicitly allows states to use cost-based methodologies instead of market rate surveys. Understanding the cost-tuition gap is critical to childcare policy: closing it requires either substantially more public investment (estimates range from $50 billion to $100 billion annually for a fully funded system), allowing childcare worker wages to remain suppressed, or accepting limited supply and access. Research indicates childcare worker turnover exceeds 30% annually, reflecting these economic pressures.