As COVID-19 spread throughout the United States, families faced increasing economic hardship. Many workers lost their jobs or saw their hours reduced, with those at the lowest wage levels hit the hardest. Families with low incomes with children in child care faced the added challenge of paying for that care during this straining time.

The Child Care and Development Fund (CCDF) offers one source of support to help families pay for child care. In 2020, about 1.5 million children in 900,000 families received subsidized child care through CCDF. Each state and territory establishes its own CCDF policies (PDF) within a set of federal guidelines. During the pandemic, the federal government provided additional flexibilities and guidance for how states and territories could further adapt their programs to meet families’ changing needs, like the need for assistance for parents who lost employment and essential workers’ needs.

In response to the pandemic, many states and territories changed how much families receiving child care subsidies were required to pay for care, referred to as copayments or family fees. While federal guidelines suggest family copayments should not exceed 7 percent of income, states and territories can set the copayment amount based on family size, income, the number of children in care, or other factors. Our most recent reports (PDF) show most states and territories reduced copayments to $0 for some period during the pandemic, which helped alleviate financial burdens on families using subsidized child care—a strategy that could also help in future crises.

Read the full article about childcare costs by Margaret Todd, Danielle Kwon, and Kelly Dwyer at Urban Institute.