Student loan debt and economic hardship among child care providers
In response to the pandemic, Congress temporarily paused federal student loan and interest payments in March 2020, providing relief to millions of student loan borrowers, including child care providers. On August 30, 2023, the debt relief plan ended, and student loan payments restarted in October 2023.
Download the complete fact sheet for direct quotes from survey participants and more.
A RAPID Survey fact sheet reported in May 2022 that student loan debt is severe and pervasive among child care providers and that the economic hardship providers face is compounded by this student loan debt as well as low pay, limited benefits, and job instability within the early childhood workforce.
In this fact sheet, we build on those findings with survey data collected in November 2023, just one month after student loan payments restarted. We asked child care providers about the potential impacts of federal student loan debt payments resuming to better understand the challenges and experiences of these important adults in the lives of young children and families. Our sample includes center-based teachers and directors, home-based providers, family, friend, and neighbor (FFN) providers, and babysitters/nannies.
Child care providers continue to experience economic hardship
Since March 2021, the RAPID Survey has asked child care providers about their overall well-being, economic circumstances, and working conditions. One way that RAPID looks at economic circumstances is by asking about experiences of material hardship, defined as difficulty meeting basic needs, such as food, housing, utilities, child care, healthcare, and wellness activities.
The data show that material hardship is prevalent and increasing among child care providers. Nearly half (45%) of providers reported experiencing difficulty affording at least one area of basic need in November 2023. The percentage of providers experiencing material hardship increased from May 2022 (37%).
The proportion of child care providers in the RAPID survey who are carrying student loan debt has also increased since May 2022. More than one in five (21%) child care providers reported that they had student loan debt in November 2023, a disproportionately high rate compared to 16% of the U.S. adult population overall.* The percentage of providers reporting student loan debt has grown from the 19% we reported in May 2022.
*According to the Federal Student Loan Portfolio, there have been 41 million student loan recipients by the last quarter of 2023, which accounted for 16% of the U.S. adult population (258.3 million).
Providers' reporting difficulty affording at least one area of basic need, overall
Family, friend, and neighbor (FFN) providers are particularly burdened by student loan debt
Providers of all races, ethnicities, and income levels and in all types of child care roles reported having student loan debt. Along with the percentage of providers reporting student loan debt, we asked providers to estimate the amount of their student loan debt.
Among providers who indicated that they currently have student loan debt, family, friend, and neighbor (FFN) providers reported the highest levels of student loan debt: $109,000 on average, more than three times the student loan debt reported on average by center directors, home-based providers, or center teachers. Center directors and home-based providers reported on average $35,000 of student loan debt and center teachers reported on average $26,000 of student loan debt.
The current median hourly wage for child care providers ($14.60) makes it unlikely that many will be able to pay off student loan debt over time. Because low wages fuel high turnover, these stresses and hardships result in disrupted care for families and fewer of the supportive relationships that are essential to young children’s positive development. Addressing these issues will rely on prioritizing policies that significantly increase workforce compensation, including standard benefits like health insurance and retirement benefits, coupled with alleviating student loan debt.
Providers' reported average level of student loan debt, by provider type
The resumption of student loan payments poses a burden to the majority of providers
In previous RAPID fact sheets, we reported that when providers experience material hardship, they also report higher levels of emotional distress (a composite of anxiety, depression, loneliness, and stress). In May 2024, we reported that anxiety and depression are prevalent among child care providers, with half of the providers RAPID surveyed experiencing these emotional distress symptoms. This association between material hardship and emotional well-being is particularly concerning because of the high levels of hardship among child care providers.
In the context of low pay, limited benefits, and instability in the child care workforce, the resumption of student loan payments poses burdens to both providers’ financial and emotional well-being. Three in five providers (60%) said that repayment will cause their household financial hardship, and 63% said they’ve felt stress in the last month about their ability to pay off their student loans. FFN providers, in particular, shared an overwhelming response with 100% of FFN providers reporting high levels of stress about repaying their student loans.
Providers' reporting stress regarding their ability to pay off student loan debt, overall
Conclusion
Material hardship and substantial student loan debt significantly impact child care providers’ economic stability, underscoring the urgent need for increased support for this essential workforce and, by extension, for the families and young children who rely on the nurturing care, experience, and expertise that their child care providers offer. We will continue to monitor trends in economic hardship, including the burden of student loan debt among child care providers, and discussions of policies and programs, such as federal student loan forgiveness, that could provide needed support to the early childhood workforce.
Download the complete fact sheet for direct quotes from survey participants and more.
