Key Insights
- Childcare is taking up a major share of family budgets, with annual costs now rivaling rent in many parts of the country.
- Personal loans may help with temporary childcare gaps, but they work best when parents have a clear repayment plan.
- Using debt for ongoing daycare bills can add pressure, especially when interest and monthly payments stretch beyond the original expense.
- Lower-risk options should be explored before borrowing, including FSAs, tax credits, subsidies, discounts, and free PreK programs.
If your monthly daycare invoice looks a lot like your monthly rent bill, you're not alone. The average parent spends 20% or more of their annual income on child care, and in every state with available data, center-based care for two children now exceeds the median rent.
When costs outpace your paycheck, taking out a personal loan can seem like a logical fix. A lump sum can cover a daycare bill or summer camp deposit, but experts are clear: borrowing works best as a short-term bridge, not a recurring solution.
Below, we break down why childcare costs so much, when a personal loan actually makes sense, and the lower-risk alternatives worth exhausting first.
How Much Does Childcare Cost?
The cost of individual daycare programs varies greatly by state, town or city, and type of setup. There is a common thread: it’s expensive. In 2025, the national average price of child care reached $13,184 a year. Center-based care for two children now costs more than median rent in all 47 states with available data, according to the most recent data from Child Care Aware of America, a national nonprofit network of Child Care Resource and Referral (CCR&R) agencies.
Think that’s high? Consider this: you may be paying as much as college for your child’s care before they even get to elementary school, and costs keep climbing.
Why Is Daycare So Expensive?
The Economic Policy Institute reports that infant care costs anywhere from about $572 in Mississippi to $2,363 in the District of Columbia, which is over four times as much. This means that where you live directly impacts what you’ll pay. And with more than one child, those costs can easily climb past your rent or mortgage.
Why? Sean Lacey, GM of Child Care at Care.com, said it is a multiprong issue. "Child care workers are underpaid, supply is constrained, and there's been chronic underinvestment at the policy level for decades,” he said. “When families have to choose between paying rent and paying for care, that makes this a structural problem."
Can You Use a Personal Loan To Pay For Childcare?
According to Care.com's 2026 Cost of Care Report, 16% of parents reported going into debt to afford childcare. "That number hit me hard," said Lacey. "These aren't people making reckless decisions. They are parents trying to hold things together."
If you decide to use a personal loan, you'll receive a lump sum that you must repay in fixed monthly installments for the length of your repayment terms. The upside is that payments are predictable, and if you need to budget for a personal loan, the payment costs shouldn't come as any surprise.
Lacey said borrowing can make sense, but only in very specific circumstances. "If both parents are working and child care is what allows you to keep earning, taking on short-term debt to bridge a gap, say, while you're on a waitlist for a subsidized program or waiting for a tax credit to come through, can make financial sense,” he said.
But you need to keep in mind that the keyword is short-term and that you always have a clear plan to pay it down, he added.
What Are the Risks of Borrowing for Childcare?
Before taking on debt, the first thing to weigh is whether the need is one-time or ongoing.
"In most cases, I'd be cautious about using a loan to cover an ongoing expense like daycare," said Courtney Mitchell, head of Credit Card and Unsecured Lending at Citizens Bank. "Borrowing tends to work better for one-time or temporary needs than for a recurring monthly cost. The key question before borrowing is whether the challenge is temporary or ongoing."
Unlike borrowing money to consolidate debt or pay for an unexpected medical bill, daycare is a recurring expense. And because that bill can rival your rent, financing it adds a second rental-size payment to your budget that accrues interest and outlasts the invoice it covered.
"Relying on credit for recurring costs like childcare can create longer-term financial strain if not managed carefully," said Christina Roman, Consumer Education and Advocacy Senior Manager at Experian.
Here's what's at stake if borrowing gets out of hand:
- Missed payments hurt your credit: A single missed payment can make future borrowing more difficult and more expensive.
- Your debt-to-income ratio can creep too high: Taking on a loan you can't comfortably repay each month can push your DTI into a range that makes it harder to qualify for a mortgage or other financing down the line.
"Sticking to that repayment plan can help families avoid carrying costly debt throughout the year," Roman added.
What Are the Alternatives to Personal Loans For Childcare Expenses?
When it comes to budgeting for childcare, there are cost-effective ways to pay that are far less risky than taking out a personal loan. "Exhaust the free and subsidized options first. The resources are out there, they're just not always easy to find,” said Lacey.
Childcare Payment Options At A Glance
Option | Pros | Cons |
Dependent Care FSA | You can set aside $7,500 a year (pretax from your paycheck) | Your employer has to offer this benefit |
Child and Dependent Care Tax Credit | Receive up to $6,000 for two children | Claimed at tax time, and it is a credit, not cash |
State and Federal Subsidies | Varies | You must qualify and have limited funding |
Sliding Scale or nonprofit childcare centers | Potentially lower costs | Limited spots, must live near a center with this offering |
Dependent Care Flexible Spending Account
If you're a parent whose employer offers a dependent care flexible spending account (FSA), you can use this tax-advantaged tool to pay for childcare with pretax dollars right from your paycheck.
In 2026, the household contribution limit will increase to $7,500. While it may not be enough to cover full tuition, say, at a private daycare center, it does provide tax benefits, and having a designated childcare account can help automate childcare-related savings.
Child and Dependent Care Tax Credit
The Child and Dependent Care Tax Credit is frequently underutilized, Lacey notes: many families don't claim the full amount they're eligible for, even though it can cover up to $3,000 for one child or $6,000 for two or more.
Federal Assistance for Families
If you qualify, the Child Care and Development Fund (CCDF) offers subsidies to families in need, but this federal program has a lot of red tape, long waitlists, and federal policy challenges in 2026 that have added to applicants' stress. Many eligible families miss out entirely, Lacey noted, simply because they don't know the program exists.
Ask For Discounts
An easy option is to ask your provider whether they offer any discounts, such as sibling discounts, sliding-scale rates based on income, or payment plans. If your child is age 4, ask your local school whether it offers free PreK programs.
Add Childcare Costs Into Your Long-Term Budget
Consider creating a dedicated savings account for childcare costs rather than using your regular checking account, and keep your budget updated regularly, as costs like extracurriculars and summer activities can add up. "One of the most effective things you can do is treat childcare as a core household expense and plan for it the way you would rent, a mortgage, or utilities,” said Mitchell.
Tracking those costs matters too. "Tracking seasonal expenses like camps, childcare, and activities can also give families a clearer picture of total costs and help inform savings goals for the future, reducing the need to rely on credit," added Roman.
In addition, having six months' worth of expenses in an emergency fund can help, too. Without one, any unexpected expense, such as a car repair, a medical bill, or higher-than-expected camp tuition, can quickly create a cash shortfall. Building that buffer in advance can keep your childcare budget in place when life gets unpredictable.
The Bottom Line
With childcare for two children costing more than the median rent in nearly every state, it’s important to explore all of your options that can help make it more affordable, from using employer benefits to maximizing tax credits.
Borrowing for childcare should be considered a last resort, not a default, agreed most experts we spoke to, but it doesn’t have to be taken off the table. "Every family's situation is different, and for some, using a personal loan or credit card may be a practical way to manage these expenses,” said Roman. “The key is to have a clear plan in place to repay any balances.”
If you’re looking for personal loans, make sure to shop around for the best rates and terms for your household’s budget.
