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Time Magazine
3 days ago
- Business
- Time Magazine
Why So Many Childcare Centers Are Closing
For nearly 18 years, Corrine Hendrickson has run a family daycare out of her home in rural Wisconsin, navigating the low pay and long hours because she loves the job. But at the end of August, before a new school year begins, she's shutting down Corrine's Little Explorers for good. With the disappearance of federal and state subsidies that kept her afloat for the last few years, she says, the model no longer works, and she doesn't want to have to choose between raising rates or taking a pay cut. She's not alone: in Wisconsin, other childcare centers are closing ahead of the new school year. 'We're getting to an inflection point,' she says. 'I think enough of us are going to close that they're going to have to do something.' Across the country, childcare centers are struggling as they never have before. A perfect storm of rising costs, worker shortages, and the expiration of federal and state grants makes it extremely difficult for these businesses to operate. Childcare has long been in crisis. Overhead costs like buildings and liability insurance are expensive, and to take care of young kids, centers need a lot of staff, which means they have to spend a lot on payroll. But they also can't charge too much money, or families will drop out. 'Childcare is a textbook example of a broken market,' said Janet Yellen, back in 2021 when she was Secretary of the Treasury. Read More: Why So Many Women Are Quitting the Workforce But for all the struggles of childcare providers in recent years, the pandemic provided an unlikely source of hope. The American Rescue Plan included $24 billion for a Child Care Stabilization program that helped 220,000 centers keep paying wages, benefits, rent, utilities, and other costs. Another $15 billion went to help expand access to childcare. Some of that funding expired in Sept. 2023; the rest expired one year later. And while some states were able to move around federal funds or pass temporary legislation to financially support childcare facilities, that funding is expiring in much of the country. 'It was already a non-sustainable business model, and it got even worse,' says Julie Kashen, senior fellow and director for women's economic justice at the Century Foundation, a left-leaning think tank. 'The pandemic funding really helped prop it up, but ultimately turned into a bridge to nowhere.' Indeed, Corrine Hendrickson said she was actually most solvent during the pandemic; the federal funding even allowed her to hire an extra substitute employee. But, she says, she had been thinking of getting out of the childcare business leading up to the pandemic. She only makes a profit of $20,000 a year, which is an extremely low salary for all the work she does. When it became evident that neither the federal nor state government was going to continue to support childcare providers in Wisconsin, she says, she decided to close her business. The end of funding appears to be leading to many closures. North Carolina, for example, was able to stretch its federal pandemic dollars through June 2024. But after that, 43 centers across the state closed, according to Candace Witherspoon, director of the division of child development and early education in North Carolina. The state was able to release some stopgap funding that lasted through March 2025, but when that ended, even more programs closed. The state has seen 158 programs shutter since the beginning of the year, she says. Read More: 'People Are Going to Die': Cuts Leave Domestic Violence Support Groups Reeling The federal funding allowed many centers to raise pay from $11 an hour to $14, Witherspoon says, but even the higher rate is not enough to attract and retain workers when fast-food restaurants and other businesses pay considerably more. About half of childcare providers in the state aren't able to offer health insurance for their workers, and about 43% of childcare workers in the state are on some form of public assistance like Medicaid and food stamps. Yet demand for childcare is high. 'North Carolina is in crisis because many of our parents are being forced to leave the workforce' since they can't find care for their children, Witherspoon says. In North Carolina, there's only one infant and toddler spot for every five families applying for care. When childcare centers close or parents are unable to find a spot for their children, one parent—usually the mother—often drops out of the workforce to care for the kids. Between the second quarter of 2023 and the third quarter of 2024, the number of people who reduced their hours to part-time or who left the labor force altogether due to childcare rose 43%, according to the Federal Reserve Bank of Kansas City. One analysis of the childcare stabilization funds dispersed during the pandemic found that they helped the mothers with young children stay in the workforce. About 26% of the money spent to stabilize childcare actually ended up back in the government's coffers through tax receipts. As federal and state dollars expire, the childcare business is getting even tougher. Inflation is driving up costs like rent and insurance. Labor is becoming more expensive, and providers are facing more competition from other businesses that can pay better. And roughly 20% of the childcare workforce is made up of immigrants, which means that the Trump Administration's deportation campaign is affecting some workers. One childcare provider in Seattle, for instance, was recently detained by ICE. Read More: Positive Economic Data Is Still Hiding Bleak Reality for Many Families The cost of childcare now exceeds the price of college tuition in 38 states and Washington, according to an analysis conducted by the Economic Policy Institute, a left-leaning think tank. Meanwhile, the median wage in early care and education falls below 97% of other occupations, according to the Center for the Study of Child Care Employment at the University of California, Berkeley. The median wage is $13.07 an hour, but ranges from $10.60 in Louisiana to $18.23 in Washington, D.C. For many providers, raising prices is not an option. Already, prices have grown by 29% since 2020—faster than overall inflation, according to Child Care Aware, an advocacy group. 'If I raise tuition, will I lose too many families to stay afloat? If I don't raise tuition, will I be able to stay afloat?' says Meghann Carrasco, the founder and executive director of Seedlings to Sunflowers, a nonprofit childcare provider in Maine. The center used the pandemic funding to stay open for all but two months during the pandemic, and is now struggling because its Pre-K program is under-enrolled. The center raised prices 16% this year, the most it has ever raised tuition, and lost some families who couldn't afford it, Carrasco says. Even with the tuition increase, Seedlings to Sunflowers was only able to stay open because it embarked on a fundraising campaign in its community, securing $25,000 in interest-free loans and donations. 'The amount of programs closing daily is more than we've ever seen,' Carrasco says. Read More: Why So Many Seniors Can't Afford Long-Term Care Most providers say that without federal or state funding, they do not have a long-term future. Federal funding for childcare was close to becoming a reality in 2021, when the House passed a child care solution in the Build Back Better Act, but it was stripped from the next version of the bill, which became the Inflation Reduction Act. Democrats in Congress introduced a bill in April 2025 that would increase federal spending on childcare, but it's unlikely to go anywhere, especially in a political climate where some Republicans are backing policies that encourage more mothers to stay at home. For now, says Kashen of the Century Foundation, childcare providers have to hope that their states will help them survive. This creates a patchwork system where providers in certain states—often blue states—will stay open and educate more children, while others, in red states, will close or only stay open for people who can afford it. New Mexico, for instance, passed a constitutional amendment in 2022 guaranteeing the right to early childhood education. The state devoted a portion of money from oil and gas development fees to early care and education, amounting to about $150 million a year for early childhood education programs. Vermont passed Act 76 in 2023, which will fund childcare through a 0.44% payroll tax; Massachusetts added half a billion dollars in funding for childcare providers in 2024; and Connecticut passed a bill in 2025 that creates a new endowment for early childhood education. Most states, though, passed nothing at all.
Yahoo
01-07-2025
- Business
- Yahoo
Congress considering borrowing limits on federal student loans
(NewsNation) — Congress is still hashing out the details of President Trump's 'big, beautiful' budget bill, but one thing seems clear: Whatever passes will have major implications for student loans. Both the House-passed version and the proposal still being debated in the Senate include several changes to the federal student loan system, an overhaul Senate Republicans say could save taxpayers at least $300 billion. A central feature of both plans: new caps limiting how much money people can borrow from the federal government to finance their education. Some say the loan limits, specifically those on graduate school and parent borrowing, are long overdue. 'Study after study has shown that colleges exploit these unlimited loans to hike tuition,' Preston Cooper, a senior fellow at the right-leaning American Enterprise Institute, wrote in a recent op-ed. 2M student loan borrowers at risk of garnished wages But advocacy groups warn that Republicans' proposed changes will make it harder for low-income students to afford college — and push more borrowers to private lenders, whose loans generally offer fewer protections. Professional organizations like the American Medical Association have also raised concerns, saying the borrowing cap could deter qualified medical students and worsen the physician shortage. Here's what to know about the proposed caps on federal student loans. While the House and Senate proposals differ in details, both would limit how much parents can borrow through the federal Parent PLUS loan program to help pay for their children's college. Under the House plan, parents of undergraduates would be limited to borrowing $50,000 total, while the Senate plan would cap parent borrowing at $65,000 per student. Currently, there is no limit, and parents can borrow up to the full cost of attendance. Parent PLUS loans let families help pay for their children's education without saddling the student with additional debt in their name. But they often come with less favorable loan terms and have caused many parents to sacrifice their financial stability to help their children. In 2022, parents in more than 3.7 million families owed over $104 billion through the federal Parent PLUS loan program, according to the Century Foundation, a progressive think tank. By the time a student completes their program, the median Parent PLUS debt burden carried by parents who used the loan is roughly $29,600, the report found. After ten years, more than half of the original balance (55%) still remains, on average, per the Century Foundation. The legislation would cap the amount students can borrow for graduate school at a total of $100,000 for most master's programs. For professional degrees, like law or medical school, the total cap would be $150,000 under the House plan or $200,000 under the Senate's. As it stands now, those students can borrow up to the full cost of attendance through Grad PLUS loans. Cooper called the proposed maximums a 'good start' in his op-ed and said they should help rein in 'predatory' lending practices. 'Universities have used graduate loans as a cash cow to finance expensive master's degree programs of dubious value, while many schools have foisted tens of thousands of dollars in parent loans on low-income families,' he wrote. Behind on student loans? Act now; 5 million summer defaults loom But the loan ceiling, along with other proposed changes, has also raised concerns. 'The potential impact of these student-loan changes would be to worsen a growing physician workforce shortage that is already making it difficult for people to access timely care in vast areas of the country, especially in high-demand specialties,' Dr. Bruce Scott, recent president of the American Medical Association, wrote earlier this month. According to the Association of American Medical Colleges, the median cost of attending four years of medical school for the class of 2025 is $286,454 for public institutions and $390,848 for private schools. Both totals are well above the proposed borrowing caps. Nearly 43 million borrowers collectively owe $1.7 trillion in federal student loan debt. That amount represents more than 92% of all student loan debt, meaning roughly 8% is private, according to the Education Data Initiative. Some worry that capping federal student loans will steer more borrowers to the private market, which often comes with higher costs and fewer protections. 'Students and parents will be forced to turn to expensive, high-risk private lenders — many of whom have a sordid history of exploiting borrowers,' the Century Foundation warned in a recent commentary. The article pointed out that even though private student loans only account for 8% of debt, more than 40% of student-loan-related complaints submitted to the Consumer Financial Protection Bureau are about private loans. Still, Senate Republicans argue that sweeping student loan changes — including borrowing caps — are needed to fix what many see as a broken system. 'American higher education has lost its purpose. Students are graduating with degrees that won't get them a job and insurmountable debt that they can't pay back,' U.S. Senator Bill Cassidy, R-La., said in a statement announcing the Senate plan earlier this month. President Trump is urging Congress to pass the megabill by the Fourth of July, but federal lawmakers are still debating the details. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
The Hill
27-06-2025
- Business
- The Hill
Congress considering borrowing limits on federal student loans
(NewsNation) — Congress is still hashing out the details of President Trump's 'big, beautiful' budget bill, but one thing seems clear: Whatever passes will have major implications for student loans. Both the House-passed version and the proposal still being debated in the Senate include several changes to the federal student loan system, an overhaul Senate Republicans say could save taxpayers at least $300 billion. A central feature of both plans: new caps limiting how much money people can borrow from the federal government to finance their education. Some say the loan limits, specifically those on graduate school and parent borrowing, are long overdue. 'Study after study has shown that colleges exploit these unlimited loans to hike tuition,' Preston Cooper, a senior fellow at the right-leaning American Enterprise Institute, wrote in a recent op-ed. But advocacy groups warn that Republicans' proposed changes will make it harder for low-income students to afford college — and push more borrowers to private lenders, whose loans generally offer fewer protections. Professional organizations like the American Medical Association have also raised concerns, saying the borrowing cap could deter qualified medical students and worsen the physician shortage. Here's what to know about the proposed caps on federal student loans. While the House and Senate proposals differ in details, both would limit how much parents can borrow through the federal Parent PLUS loan program to help pay for their children's college. Under the House plan, parents of undergraduates would be limited to borrowing $50,000 total, while the Senate plan would cap parent borrowing at $65,000 per student. Currently, there is no limit, and parents can borrow up to the full cost of attendance. Parent PLUS loans let families help pay for their children's education without saddling the student with additional debt in their name. But they often come with less favorable loan terms and have caused many parents to sacrifice their financial stability to help their children. In 2022, parents in more than 3.7 million families owed over $104 billion through the federal Parent PLUS loan program, according to the Century Foundation, a progressive think tank. By the time a student completes their program, the median Parent PLUS debt burden carried by parents who used the loan is roughly $29,600, the report found. After ten years, more than half of the original balance (55%) still remains, on average, per the Century Foundation. The legislation would cap the amount students can borrow for graduate school at a total of $100,000 for most master's programs. For professional degrees, like law or medical school, the total cap would be $150,000 under the House plan or $200,000 under the Senate's. As it stands now, those students can borrow up to the full cost of attendance through Grad PLUS loans. Cooper called the proposed maximums a 'good start' in his op-ed and said they should help rein in 'predatory' lending practices. 'Universities have used graduate loans as a cash cow to finance expensive master's degree programs of dubious value, while many schools have foisted tens of thousands of dollars in parent loans on low-income families,' he wrote. But the loan ceiling, along with other proposed changes, has also raised concerns. 'The potential impact of these student-loan changes would be to worsen a growing physician workforce shortage that is already making it difficult for people to access timely care in vast areas of the country, especially in high-demand specialties,' Dr. Bruce Scott, recent president of the American Medical Association, wrote earlier this month. According to the Association of American Medical Colleges, the median cost of attending four years of medical school for the class of 2025 is $286,454 for public institutions and $390,848 for private schools. Both totals are well above the proposed borrowing caps. Nearly 43 million borrowers collectively owe $1.7 trillion in federal student loan debt. That amount represents more than 92% of all student loan debt, meaning roughly 8% is private, according to the Education Data Initiative. Some worry that capping federal student loans will steer more borrowers to the private market, which often comes with higher costs and fewer protections. 'Students and parents will be forced to turn to expensive, high-risk private lenders — many of whom have a sordid history of exploiting borrowers,' the Century Foundation warned in a recent commentary. The article pointed out that even though private student loans only account for 8% of debt, more than 40% of student-loan-related complaints submitted to the Consumer Financial Protection Bureau are about private loans. Still, Senate Republicans argue that sweeping student loan changes — including borrowing caps — are needed to fix what many see as a broken system. 'American higher education has lost its purpose. Students are graduating with degrees that won't get them a job and insurmountable debt that they can't pay back,' U.S. Senator Bill Cassidy, R-La., said in a statement announcing the Senate plan earlier this month. President Trump is urging Congress to pass the megabill by the Fourth of July, but federal lawmakers are still debating the details.
Los Angeles Times
26-06-2025
- Politics
- Los Angeles Times
Opinion: Bridging barriers of California's bilingual education: From legislative intent to meaningful action
When it comes to the value of bilingual education in improving educational outcomes for Hispanic youth, the message should not get lost in translation: dual-language academic offerings dramatically enhance these students' English language acquisition, standardized test scores, graduation rates, and college preparation, as reported by CalMatters . Based on overwhelming evidence supporting these benefits, California enacted Proposition 58 in 2016, repealing the restrictions imposed by Proposition 227, which had previously banned bilingual education. Even with Proposition 58, CalMatters says the expansion of bilingual education in California has been slow, despite a desperate need. Such programs in states like Texas had a more rapid implementation, even though California has more English learners than any other state. Why? According to Century Foundation , the primary barrier is a shortage of qualified bilingual teachers, underscoring the necessity of backing such legislation with resources to enable its success. To address this gap, California should create incentives to attract and retain bilingual educators and partner with colleges to create robust teacher training programs. The lack of qualified instructors —a consequence of the previous ban—has created a professional deficit that should be bridged to meet the demand for dual-language programs. This situation mirrors the challenges of de jure versus de facto implementation seen in the civil rights movement in the United States. Simply passing legislation is not enough; achieving meaningful change requires the necessary infrastructure and strong legislative and executive support. For example, according to EdSource , only 16.4% of English learners in California are enrolled in bilingual classrooms, compared to 36.7% in Texas. In response to these challenges, California launched the Global California 2030 initiative. This ambitious plan aims for half of the state's students to be on a path to bilingualism and for 1,600 schools to offer dual-language programs by 2030. While well-intentioned, this initiative faces the same implementation hurdles. As stated in EdSource , Goals without actionable plans can falter, and this initiative is no exception. To make bilingual education more accessible and empower Hispanic youth, policymakers should provide funding for specialized training programs, offer financial incentives, establish targeted recruitment programs, and ensure robust oversight and planning. Without addressing the logistical and practical barriers to implementation, reaching the intended outcomes of policies like Prop 58 can take much longer and be more difficult to achieve. Meanwhile, hundreds of thousands of California's Hispanic students will miss out on valuable educational opportunities. We owe it to them to ensure that Prop 58 is accompanied by the necessary funding, oversight, and planning to set ESL students up for success. Related
Axios
28-05-2025
- Business
- Axios
White House cuts aid for state unemployment systems
The White House is terminating $400 million in funds for states meant to modernize their unemployment insurance systems. Why it matters: These systems fell apart when unemployment soared in the pandemic, leading to rampant fraud and delays for beneficiaries. Without updates, similar problems could be on tap for the next recession. Zoom out: Congress authorized the money in the $1.9 trillion coronavirus relief bill passed in 2021. Congress allocated $2 billion for the efforts, later cutting that funding in half. Those funds were wasted on equity projects, but only a fraction of the money appears to have been devoted to such measures, according to the Labor Department, which sent a notification letter to Congress last week to let lawmakers know "these grants are being terminated." About 28% of the funds granted to states, $219 million, were used specifically for equity, as outlined in a Labor Department report. In this case, "equity" is a term meant to describe efforts to make the unemployment insurance system easier for people to use and access, perhaps not what is typically considered DEI. Efforts to promote equitable access to unemployment insurance "include eliminating administrative barriers to benefit applications, reducing state workload backlogs, improving the timeliness of UC payments to eligible individuals, and ensuring equity in fraud prevention, detection, and recovery activities," according to the report. Follow the money: $204 million was awarded for IT modernization, $134 million for fraud detection, and $93 million for system integrity, such as combating fraud and strengthening ID verification. The IT funds have been spent more slowly while states get projects underway, says Andrew Stettner, who led the modernization efforts during the Biden administration. "When I left in December, states had spent about $100 million of the $219 million specifically for equity but only $2 million of the $204 million for IT," says Stettner, who is now director of economy and jobs at the Century Foundation. 18 states are working on updates to their systems, he says. Pulling this aid will be devastating for the states just getting started on these projects. "States were in the middle of all the planning and procurement. Now they're really holding the bag for finishing," Stettner says. The other side: The grants were "squandered" on "bureaucratic and wasteful projects that focused on equitable access rather than advancing access for all Americans in need," the Labor Department says in an emailed statement to Axios. "We're committed to ensuring our unemployment system is free from fraud and abuse, and we look forward to partnering with state workforce agencies on real solutions that meet the needs of American workers."
