Student loan debt is not only pushing many Americans to start families later in life, it's also creating problems when it comes to paying for child care.
Roughly one in five Americans with student loans say their debt has had a negative effect on their ability to provide or pay for child care, according to a report on the impact of student loans by the MIT AgeLab and sponsored by TIAA.
About one in four Americans has student loan debt, with the average balance just over $37,000. The average student loan payment is $393 a month.
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But that monthly loan payment makes balancing other monthly bills more difficult, especially when it comes to expensive fixed costs such as child care. Last year, American families with children under the age of 5 typically spent $250 a week on child care, according to an analysis by the Center for American Progress. The organization estimates that's about 10% of the average family's monthly income of $10,981. In fact, it's not uncommon for child care to be a family's largest monthly household expense — more than rent or a mortgage.
That's unaffordable, even by the federal government's standards. Under the U.S. Department of Health and Human Services's guidelines, child care is considered unaffordable if it adds up to more than 7% of the household income.
Where you live can play a major role in the cost. Over half of Americans live in neighborhoods classified as child-care deserts by the Center. These are areas with an insufficient supply of licensed child-care providers, according to a comprehensive study the organization undertook last year.
The average cost of full-time care for children ages 0-4 is more expensive than the average cost of in-state college tuition. In Michigan, the average family pays almost $14,000 a year in child care, while the average family living in Washington D.C. pays over $25,000 a year, according to the Care Index created by New America and Care.com.
The unaffordability of child care is pushing some lawmakers to take more action. Earlier this year, Democratic presidential candidate and Massachusetts senator Elizabeth Warren rolled out a plan for a sweeping universal child care program. Funded through a proposed new millionaires tax, Warren's plan calls for more subsidized child-care centers nationwide to ease the burden of child-care costs on family finances.
Sen. Kamala Harris (D-Calif.) and former Texas congressman Beto O'Rourke also back forms of universal child care, supporting the Child Care for Working Families Act introduced earlier this year. Similar to Warren's plan, the legislation aims to offer families affordable child-care options through age 13 by relying on a cost-sharing program between the federal government and the states.
Meanwhile, Sen. Kirsten Gillibrand (D-N.Y.), who released a "Family Bill of Rights" plan aimed at making all aspects of family care more affordable, supports tax credits for child care. And Julián Castro and Andrew Yang both support universal preschool, according to Vox.
The Trump administration has also tackled child care policies, with President Donald Trump signing off an on $2.4 billion funding increase for the Child Care and Development Fund last year. Under the program, states have access to $8.1 billion to help fund child-care options for low-income families. Additionally, the president's proposed 2020 budget released earlier this year earmarked $1 billion to increase affordable child-care options in underserved communities across America.
Unfortunately, for the families currently struggling with child-care costs, there's no easy fix. "I'm not going to discount how hard it is when dealing with two rather high costs, student loans and child care," says Douglas Boneparth, a financial advisor with New York-based Bone Fide Wealth.
Juggling these costs, especially if your monthly budget is tight, is going to come down to really mastering cash flow and having an intimate understanding of where your money goes, he says. "If your income can only go up so much, and you have to deal with the fixed costs of your student loans and your child care, you're really going to need to pay close attention to where the rest of your money is going," Boneparth says.
You may also need to see if there's any way of making some additional money, maybe taking on a second job or a side hustle, Dan Keady, TIAA's chief financial planning strategist, tells CNBC Make It.
"If you find that you need to take on credit card debt to make your life work, you probably need to make some very big changes, maybe even some sacrifices that are going to be uncomfortable," Boneparth says. "Nobody wants to hear that, but that's the truth."
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