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Note: The American Families Plan has not yet been signed into law and will likely undergo changes before it’s passed by the federal government. We will keep this post updated as we learn new information.
The Biden administration recently introduced the American Families Plan, a $1.8 trillion package that would invest in childcare, education, and paid family leave programs. The proposal includes $225 billion for subsidizing childcare costs and $800 billion in tax credits and cuts that would benefit families with children.
If the bill is passed, it will be the largest financial investment in childcare and early education in recent American history. Here’s what childcare and preschool providers need to know about the American Families Plan and how to stay updated on funding opportunities.
$225 billion in childcare funding
The American Families Plan allocates $225 billion towards helping families pay for childcare. The funding would be based on a sliding income scale, so that low-income and middle-class families would not need to pay more than 7% of their income on childcare for children under 5 years of age. The program would cover all childcare costs for the lowest-income families.
The package would also provide funding for childcare centers to “cover the true cost of quality early childhood care and education,” including smaller class sizes, developmentally appropriate curriculum, and classroom environments inclusive of children with learning disabilities. In addition to these service improvements, the funding would also be used to increase the minimum wage of childcare providers to $15, up from an average hourly rate of $12.24 in 2020. This wage increase would apply to all early childhood staff employed by pre-kindergarten and Head Start programs.
The American Families Plan also calls on Congress to double its federal TEACH scholarships from $4,000 to $8,000 for prospective teachers and expands the scholarship to include students studying to become early educators.
$200 billion in funding for free, universal preschool
The American Families Plan would allocate $200 billion to free, universal preschool that would be available to all 3- and 4- year olds, regardless of their families’ incomes. In partnership with state governments, this program would focus on better preparing children for K-12 learning and lessening the financial burden of paying for childcare that many families face.
The White House estimates that when fully implemented, this program would benefit 5 million children and save the average family $13,000 in childcare costs. Currently, 44 states have some form of publicly-funded pre-kindergarten education, but the National Institute for Early Education Research believes that most states don’t spend enough per child to provide them with truly high-quality early education.
$800 billion in tax relief for families with children
Under the American Rescue Plan, the Biden administration’s stimulus package, the child tax credit (CTC) was expanded—but only for one year. This expansion boosted the CTC to $3,600 for every child under 6 and to $3,000 for every child 6 to 17. The expanded CTC was also made fully refundable, so even families in the lowest tax brackets would still be able to receive the full amount. The American Families Plan would keep the expanded CTC for four more years, until 2025.
Similarly, the American Rescue Plan also expanded the child and dependent care tax credit (CDCTC) for one year and made it fully refundable. This benefit gives families a tax credit for as much as half of the amount they spend on childcare—up to $4,000 for one child or $8,000 for two children or more. The American Families Plan would make the expanded CDCTC permanent, providing families with more substantial help to pay for childcare.
Next steps for childcare providers
The American Families Plan is still in its early stages and is likely to undergo changes before it’s signed into law. So what should childcare providers do in the meantime? At brightwheel, we recommend the following tips:
1. Contact your local CCR&R agency. The best way to stay updated on funding opportunities is to keep in touch with your local CCR&R (Child Care Resource & Referral) agency. They’ll have the most current information on what government funding is available and how to access it. To find your local CCR&R agency, use this search form.
2. Make your voice heard! The American Families Plan has the potential to impact childcare and early education in huge ways. With policies this big, it’s important to have the voices of educators like yourselves at the table. If you want to share your opinions with your elected officials, visit NAEYC’s America for Early Ed website, which helps you easily look up and write to your representatives about why they should join you as part of the early childhood education movement.
3. Check back on the brightwheel blog and follow us on Facebook. Our team is committed to providing helpful resources to early educators. We’ll be updating this post as we learn new information, so it might be beneficial to bookmark this page or keep it handy as a reference. You can also subscribe to our blog (just enter your email address where you’re prompted to in the right sidebar menu) and follow brightwheel on Facebook so you never miss an upcoming post!
While many early childhood advocates are optimistic about the American Families Plan and what it means for the future of the ECE industry, other childcare and preschool providers have questions about how the bill will impact their business. Regardless of where you stand, we hope you will use this moment to voice your thoughts and opinions with your friends, colleagues, and broader communities.
Thank you for everything you do to support the health and development of the youngest members of our society!
Brightwheel is the complete solution for early education providers, enabling you to streamline your center’s operations and build a stand-out reputation. Brightwheel connects the most critical aspects of running your center—including sign in and out, parent communications, tuition billing, and licensing and compliance—in one easy-to-use tool, along with providing best-in-class customer support and coaching. Brightwheel is trusted by thousands of early education centers and millions of parents. Learn more at mybrightwheel.com.
