Short answer: before you borrow for child care, check government assistance, Head Start, help from the provider and your employer, and the federal tax breaks for care costs. Childcare.gov lists these options (Childcare.gov). A loan adds interest on top of the care cost, so it works best as a last step, not the first.
Government programs
- Child care financial assistance (also called vouchers, certificates or subsidies): states and territories get federal funding to help families with low income pay for child care so they can work or attend school. Eligibility is different in each state; Childcare.gov links to each state program (Childcare.gov).
- Head Start and Early Head Start: free, federally funded programs for families that meet income rules. Early Head Start serves pregnant women and children under 3, and Head Start serves children 3 to 5 (Childcare.gov). The Head Start locator finds programs near you.
- State-funded prekindergarten: some states offer pre-K for children 3 to 5 at low or no cost to eligible families (Childcare.gov).
- Military families: there are programs that help military families pay for child care (Childcare.gov).
Help from providers and employers
- Some providers and local nonprofits offer fee assistance or scholarships, and some programs give sibling discounts (Childcare.gov).
- Some employers offer onsite care or have discounts with nearby programs (Childcare.gov).
- Ask the provider whether it offers a payment plan or lets you spread a registration fee or deposit over time.
Tax breaks for care costs
- Dependent care FSA: if your employer offers one, you can set aside part of your pay before payroll taxes to pay for child care (Childcare.gov). For 2026, you can generally exclude up to $7,500 a year ($3,750 if married filing separately) (IRS Pub. 15-B).
- Child and dependent care credit: you may be able to claim it if you paid for the care of a qualifying person so you (and your spouse, if filing jointly) could work or look for work. The credit is a percentage of up to $3,000 of expenses for one qualifying person or $6,000 for two or more, and the percentage depends on your income (IRS Topic 602).
- You cannot count the same dollars twice: dependent care benefits you exclude from income reduce the expense limit for the credit (IRS Topic 602). Publication 503 has the details (IRS Pub. 503).
This section explains the general rules. It is not tax advice; check with the IRS or a tax professional about your own return.
Example: borrowing $2,000 for child care
This example compares paying $2,000 off over 12 months with a personal loan at 11.90% APR (the Federal Reserve's August 2026 average for 24-month loans) and with a credit card at 22.36% APR (the August 2026 average card rate) (G.19). Your rates may differ, and the card line assumes equal monthly payments and no new charges.
| Option | Monthly payment | Interest | Total paid |
|---|---|---|---|
| Personal loan, 11.90% | $177.60 | $131.20 | $2,131.20 |
| Credit card, 22.36% | $187.54 | $250.48 | $2,250.48 |
$2,000 + $131.20 = $2,131.20, and $2,000 + $250.48 = $2,250.48. Assistance, a scholarship or a tax break that covers part of the bill cuts the amount you need to borrow, and interest with it. The payment formula guide shows how the payments are worked out.
If the cost is a one-time emergency
For a sudden bill, see the guide to emergency help without a loan.
Questions to ask
- Does my state child care assistance program or a Head Start program near me have openings, and how do I apply?
- Does the provider offer scholarships, sibling discounts or a payment plan?
- Does my employer offer a dependent care FSA, and when can I enroll?
- For a loan: what is the APR, is there an origination fee, and what is the total of payments?
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Sources
- Childcare.gov: Child care financial assistance options
- Childcare.gov: Head Start and Early Head Start
- HeadStart.gov: Head Start center locator
- IRS Publication 15-B: Employer's Tax Guide to Fringe Benefits (2026)
- IRS Tax Topic 602: Child and dependent care credit
- IRS Publication 503: Child and Dependent Care Expenses
- Federal Reserve: G.19 Consumer Credit (released October 7, 2026), terms of credit, August 2026: credit card plans and 24-month personal loans
Disclosure: Modern Lending Solutions is not a lender, loan broker or agent for any lender or loan broker, and does not make credit decisions. Any compensation we receive is paid by participating lenders, only for advertising services. This guide is general information, not financial or legal advice.