Raising Children: Costs Soar, Surpassing College Tuition

While parents often worry about the high cost of college tuition for their children, recent surveys reveal that even more exorbitant expenses occur earlier in a child’s life. According to lending platform NetCredit.com, childcare costs more than in-state public college tuition in over half of the U.S. states. Furthermore, teenage car ownership has also become more expensive than in-state tuition at public universities, as per an analysis by the car app Jerry.

Raising children has always been expensive, but it’s becoming increasingly so, particularly due to two years of elevated inflation that are placing additional financial strain on families. On average, families now spend 19% of their annual income on child-rearing expenses, according to online lending marketplace LendingTree. LendingTree Chief Credit Analyst Matt Schulz noted that ideally, childcare costs should not exceed 10% of a family’s total income, but this is a challenging goal for many Americans.

Childcare Expenses Exceed College Tuition in Many States

Childcare costs, on average, exceed public college tuition by $1,031 per year, according to NetCredit. The study compared average annual fees for in-state college tuition and childcare in each state and evaluated the affordability based on local average salaries. In 28 out of 50 states, childcare surpasses in-state tuition, with Hawaii having the largest gap of $15,995 more than a year of tuition. Conversely, Vermont’s annual childcare costs are $5,423 less than in-state public college tuition.

Teen Car Ownership Costs Outpace Tuition Fees

Teenagers’ car ownership expenses now amount to $11,378 per year, which is more than the average annual in-state tuition at a four-year public university, estimated at $10,940, according to Jerry. These calculations include the difference in insurance costs between teen drivers and those over 19, based on AAA’s driving costs calculator.

Car ownership costs have risen significantly in recent years due to soaring prices for auto insurance, maintenance, car repairs, vehicle prices, parts, and gasoline, outpacing the rate of tuition increases at four-year state universities. These trends are likely to continue as interest rates climb.

The surging demand for childcare, driven by the rise in two-income households, has contributed to the increasing costs of childcare. Additionally, the pandemic led to wage growth for childcare workers as centers struggled to attract and retain employees, further escalating costs. In July, annual childcare costs increased by 6%, twice the pace of overall inflation, according to the Bureau of Labor Statistics.

In summary, raising children in the United States is becoming an increasingly costly endeavor, with childcare and teenage car ownership expenses surpassing the price of in-state college tuition in many states. These rising costs are placing a significant financial burden on American families.