Over 100,000 American families will see a decrease in childcare expenses over the next five years thanks to a new rule that the Biden administration unveiled on Thursday.
Under the measures put forth on Thursday, childcare copayments for families receiving federal childcare assistance through the Child Care and Development Fund (CCDF) would be capped at 7% of their family’s income.
Additionally, the bill will facilitate the elimination of co-payments by states for several groups of people, including low-income families, families with children who are in foster care, children who are homeless, and families whose income is less than 150% of the federal poverty line.
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Additionally, co-pays will be capped for participants in the free, federally supported Head Start and Early Head Start programs, which offer social services, health care, and education to qualified families.
The White House claims that this new rule could save a Wisconsin family of three earning $68,000 yearly up to $635 per month.
A 2024 poll revealed that households spend an average of 24% of their income on child care, compared to the Department of Health and Human Services (HHS) recommendation that child care should cost no more than 7% of the total household income.
According to HHS Secretary Xavier Becerra, “Child care is a necessity for most working families across the country” on Thursday. “Families that have access to reasonably priced, high-quality child care are better equipped to take advantage of career opportunities, take care of other essential needs, and go to work knowing their kids are safe. For this reason, the Biden-Harris administration has prioritized funding for early care and education, and we will keep working to assist families all around the nation.
States would also be required by the new rule, which was unveiled on Thursday, to improve accessibility for childcare subsidy applications by making them available online and through mobile devices.
The Biden administration intends to leverage a family’s eligibility for other social service programs as a sign that the family is eligible for child care assistance, in an attempt to expedite these applications. For example, there’s a fair possibility you’ll be eligible for childcare assistance under this new rule if your family now receives Supplemental Nutrition Assistance Program (SNAP) benefits.
The measures unveiled last week will also assist childcare providers since more childcare facilities will remain open as a result of the new laws, which mandate that states pay childcare providers based on enrollment rather than attendance. When a center receives funding contingent on attendance, providers are only compensated for the days on which a child is present. The Center for American Progress claims that this drives up expenses for providers.
Additionally, states will have to pay childcare facilities both in advance and on schedule; at the moment, only 11% of center-based and 4% of home-based providers that participate in the CCDF program receive their payments on schedule.
The rule will take effect on April 30. However, states will first need to plan how they will comply with the new requirements. States have the option to seek for a two-year extension, and in certain cases, the complete implementation of these changes may not happen until 2026.
Vice President Kamala Harris commented on the regulation in a statement, saying, “President Biden and I believe that every family in our nation should be able to access affordable child care.” “As we once again call on Congress to get it done, President Biden and I will continue fighting to cap child care costs at $10 per day for millions of American families and make preschool free for all four-year-olds.”