The Childcare Cliff: Federal Childcare Funding is Ending 

The COVID-19 pandemic highlighted the already-existing issues within the childcare industry with the closures of daycares and schools, leading to parents scrambling for alternate options. In response, the American Rescue Plan Act was passed, providing $39 billion in federal childcare funding to aid parents and childcare providers in their time of need.  

 However, this assistance was allowed to expire on September 30, 2023, leaving many worried parents (and economists) wondering what will happen next. In this blog post, we discuss what the Federal Childcare Funding is, why it matters, and how it impacts all of us. 

What is the Federal Childcare Funding 

The Federal Childcare Funding was a part of the American Rescue Plan Act passed to help families during the COVID-19 pandemic. The American Rescue Plan Act has provided vital support to childcare in two significant ways. First, it has enabled states to extend direct financial assistance to families in need. Second, it has allocated funding to early education programs, ensuring their continued operation during times of economic uncertainty.  

 This funding helped make essential childcare services accessible and affordable to working parents, thereby ensuring that they could retain their jobs and support their families. 

Unfortunately, an analysis conducted by the Century Foundation has revealed that when these funds are depleted, more than 70,000 programs nationwide are at risk of closure. That would leave approximately 3.2 million children in jeopardy of losing their childcare spots. 

Why it Matters Parent, or Not 

The ending of Federal Childcare Funding matters not just to parents but also to childcare providers, workers, state governments, and the economy. Childcare providers have relied on this funding to keep their doors open and their workers employed. Without the funding, they could be forced to close down, leaving workers jobless.  

 Additionally, childcare is a significant industry that generates tax revenue for states. The lack of funding will have a ripple effect as parents may quit their jobs to care for their children, causing a decline in consumer spending, which can hurt the economy. The loss in tax and business revenue will likely cost states $10.6 billion in economic activity per year. 

 Furthermore, the loss of childcare centers may lead to a decline in the quality of early education programs for children. Children who receive quality childcare are more likely to succeed academically and socially. The loss of funding will deprive millions of children of the opportunity to receive quality early education, which can impact them for years, if not decades.  

GoodTherapy | Federal Childcare Funding

 Resources and Help are Available  

The end of federal childcare funding will have far-reaching effects on parents, childcare providers, and the economy. That is why must continue to advocate for change through ongoing discussions with local and state officials as well as members of Congress. It is critical that every child to have access to quality childcare programs and that every family can afford it.  

 For parents affected by the recent end of federal funding for childcare, can be a valuable resource. Our extensive, award-winning directory of qualified therapists offers a wealth of experience in addressing the unique challenges faced by parents, including stress management, relationship issues, and how to support their child’s mental health as they adjust to new childcare arrangements is committed to advocating for policies that promote mental health and wellbeing for families, including access to affordable childcare. We are here to support parents as they navigate this difficult and uncertain time. It’s important to remember that you’re not alone and help is available. Let’s work together to navigate this difficult period and continue to support bright futures for our children. 



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