How Student Loans For Preschool Make A Bad Problem Worse


preschoolers head startNew York City mayoral candidate City Council Speaker Christine Quinn has put forward a new idea to help parents afford childcare: student loans for preschool. Her pilot program will offer low-interest loans to families with children between the ages of two and four who have an annual income of $80,000 to $200,000. Parents will be able to get loans of up to $11,000 and make interest-only payments until Kindergarten. The loans will be available to 40 families in the first year.

Quinn’s pilot program is aimed at helping parents afford the cost of childcare, which in New York is $14,000 a year on average, making it the least affordable state. The competition for preschool in New York City is also fierce, as there were 28,817 applicants for 19,834 slots in 2011. In some neighborhoods, applicants for free preschool programs outnumber slots by eight to one.

Across the country, just 28 percent of four-year-olds were enrolled in preschool last year, a number that has recently stayed flat. That ranks the United States at number 26 for enrollment compared to developed peers. As Jessica Grose reports at Slate, experts also have found that access to preschool is lowest for the middle class, as they can’t access Head Start programs that help low-income families yet don’t have the means for pricey private programs.

Unfortunately, loans are unlikely to fix the problems facing parents. As Matt Yglesias writes at Slate, student loans for college end up benefitting borrowers when a college increases their earnings later in life. That makes paying back the loan easier in the long run. But loans for preschool won’t bring any increase in parents’ income to help them pay back loans come Kindergarten. Interest will simply add to the already incredibly high cost.

Instead of focusing on subsidizing loans, state governments could follow the examples of Oklahoma, Georgia, West Virginia, and others in offering universal access to preschool. And President Obama has proposed a plan that would bring such access to all families. A universal program would not just benefit children and their parents, but it would have significant benefits for the economy and society at large.