Family, Kids & Relationships

Here’s What the New Relief Package Means for Your Family’s Child Care

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The United States has a long-standing child care crisis. The system is plagued with inequitable access for children from communities of color, poverty-level wages for child care workers, and unaffordable care for many American families. The crisis has only been made worse by the pandemic—from parents who were left without childcare, to childcare providers struggling to balance increased safety costs with low enrollment, and schools that have struggled to reopen. Disruptions to childcare can negatively impact critical parts of family life, including kids’ mental health and parents’ ability to work outside the home. The latest Covid-relief bill, known as the American Rescue Plan, seeks to address this issue.

Some of the most well-known provisions of the bill are the one-time stimulus check and an expanded child tax credit, which can help struggling families afford child care. However, the measure also provides funding specifically for child care, reopening schools, remote learning, and even higher education by expanding access to grants and relieving those who can’t pay back student loans right away. In fact, the bill is so comprehensive in its benefits to working families that Katherine Gallagher, director of child care and early education at the Center for Law and Social Policy, called it “a game changer” in a recent interview with USA Today.

Individual family benefits

Parents can take advantage of an expansion of the child tax credit from $2,000 to $3,000, with an additional $600 for kids five years old and younger, and higher limits on the child care and dependent credit for parents or guardians who wish to deduct the cost of caregiving for dependents (up to a certain threshold). The credit phases out for individuals earning more than $75,000 a year, or $150,000 for married couples filing jointly. The credit, however, is refundable, so even low-income Americans can receive the full allowance. The changes are expected to impact nearly 10 million children living at or close to the poverty line. 

What are the child care and school provisions?

The state of the child care industry and education also impacts working families. Luckily, this stimulus bill provides support for child care providers, an industry that has seen a 17 percent increase in unemployment since the start of the pandemic—a burden that falls primarily on women. A survey released in December by the National Association for the Education of Young Children found that 56 percent of child care facility owners said they are losing money on a daily basis. Without federal support, two out of five providers, half of whom are providers of color, say they will close permanently.

The new bill earmarks $24 billion to go directly to financially stressed child care providers. These funds can be used by publicly funded and private child care programs for expenses such as:

  • Personal protective equipment
  • Offsetting costs associated with keeping facilities safe
  • Rent or mortgage payments
  • Payroll and training for staff
  • Mental health support for staff and children
  • Other Covid-19 related expenses

Another $15 billion would help subsidize child care costs for eligible families—simply put, this money will reduce childcare fees for those who qualify, helping an estimated 875,000 kids. Specifics regarding eligibility is left to the states, but it usually includes healthcare workers regardless of income, and cash-strapped families with young children attending a licensed childcare facility.

Schools will also receive $125 billion to reopen safely, with the money intended to help provide more space for social distancing and other safeguards, as well as lengthening the availability of school-provided meals. The bill even provides $7 billion to the Federal Communications Commission so schools and libraries can ensure all children participate in remote learning, even if they don’t have internet access or a computer at home.

What this means for families

Together, this federal aid will increase the availability of child care and schools, while making them safer and more affordable. Most of the money will be distributed at the state level, with each state setting their own application processes. Since each state is handling their own applications, the process for childcare providers, families, and schools to apply for grants is still evolving. Some, such as Maryland, have created portals for applying for grant funds, while most are still setting theirs up.

Some lawmakers say they’ll seek to make some of these benefits permanent, especially those related to the expanded child tax credit—an idea strongly supported by most parents. Whatever happens, the pandemic has amplified the extent of the American child care crisis, making it clear that while short-term solutions can certainly make an impact, long-term policy is sorely needed.


Dealing with school closures, childcare issues, or other challenges related to coronavirus? Find support, advice, activities to keep kids entertained, learning opportunities and more in our Coronavirus Parents: Parenting in a Pandemic Facebook Group.

For ongoing updates on coronavirus-related issues and questions that impact children and families, please find additional resources here.




The former Content Director at Parenting, parenting.com and several other brands, Ana Connery is a writer and content strategist whose work appears in USA Today, Reader's Digest, Real Simple, Cafe Mom/The Stir, Momtastic, and others.