Can you afford to cash flow a typical state college education today? No 529s, no loans, no grants, no scholarships. Can you afford to send a child to full-time day care?

Your answer should be the same for both.

My stepson just wrapped up his third year of public college in April, while my daughter just finished pre-K in a nice, but fairly typical, school/daycare. I’ll show you how three years of college expenses and 3½ years of daycare costs stack up, and I’ll share some tips to reduce those costs.

Head-to-head: Daycare vs. college

Here’s what my family’s daycare and college expenses were from 2014 through mid-2017.

As you can see, the numbers are really close. So let’s look at how we got there.


For the first year of daycare in the chart, we had a nanny come to our home for most of the work day. My wife works full-time from home, so this was a good middle ground. There are some additional childcare expenses not accounted for here, like a few people we used briefly when our nanny left. I don’t have all those figures, but if I were to guess I’d say it’s around $3,000 all told. That really puts the total at just over $40,000.

In 2015, my daughter transitioned to a Montessori school. The cost was very similar to other daycares we looked at. We paid month to month at first then took a 5% discount for prepaying the next school year, which we did in July 2015 to cover through June of 2016. The figures there also include some after-school activities. In November, we moved my daughter a school closer to our new house. There, we get a 5% discount for pre-paying each six-month block. After-school care is included there as well. Without those discounts, the cost would be right in line with college expenses.


On the college section, I’ve broken out tuition/books and housing so you can see how those stack up. My son started school in September 2014, so that 2014 figure is just one semester of expenses, and he had a $1,000 scholarship not included in this cost. I also don’t account for stuff to fill out his dorm, which is fairly negligible. For his freshman year he stayed on campus, and the past two school years he has been in less expensive off-campus housing. Housing also includes food.

A big asterisk in the tuition section: I work at the school he attends, and he became eligible for half-price tuition in September 2016. He came into school with almost a semester worth of credits from high school classes, wiping out a lot of general education courses.

He started taking some upper-division classes in Fall 2015 (see the jump in price) and more in the Spring 2016 semester (again, a big jump). It falls back some after that because of my tuition break. His major also requires differential tuition, a fancy way of saying they charge more because they can. Not all expenses are halved, so that probably saved $4,000 over the past two semesters.

What have we learned

OK, so the cost of daycare and college for my family is basically equal, and that’s including paying for college housing. I highly recommend that as a transition step into adulthood, and it’s been shown students who live on campus their freshman year perform better academically than those who live at home or off campus. (Yes, I acknowledge the caveats there.)

Your mileage will depend a lot on what type of daycares are in your area, what higher ed institution your child attends, rental prices for college housing in your area, etc.

So where does all this leave us? A paradox.

Parents start saving up for college a decade or more before their kid can even go because they know it’s really expensive, but almost no one saves for the equivalent cost of daycare.

My wild speculation on this stark difference is that we as a society talk about the enormous costs of college, the student loan market is outrageous and markets the crap out of itself, and many people are walking around with their own student loan burden to remind them of the cost. On the flip side, you can’t get loans for daycare, it’s not a massively connected industry with huge lobbying interests, and you never have to think about the cost of daycare until you decide you want it.

All this adds up to major sticker shock for new parents.

Tips for cutting costs

If you think you will eventually have a child in daycare, you should:

  • Check out daycares in your area to find out what they offer and what they cost
  • Ask about prepayment discounts
  • Ask whether they accept credit cards, and if so do they have a fee? (Use this to get cash back or travel points, not to delay paying the bill!)
  • Start saving early, just like you would for college.
  • Use a dependent care FSA paycheck deduction of up to $5,000 pre-tax to cover daycare.

If you’ve got a kid going to college or a few years away from college, aside from all the usual things to consider, think about these:

  • If the school is nearby, and it’s somewhere you might like to work and offers tuition discounts, consider taking a job there to save on your child’s education. Alternatively, if the student is planning to work full-time while going to school, can they find a full-time job at the school and get their own tuition break? Administrative assistant, groundskeeper, maintenance worker, and other such jobs might fit the bill.
  • Have your child take as many concurrent enrollment or college-credit-eligible classes as they can in high school. They’ll go in with a good chunk of the first semester’s classes knocked out, which means they can either graduate early or take 12 credit hours a semester instead of 15 to graduate in four years with less pressure.
  • Start looking at the tax implications. If you intend to pay for everything out of a 529 account you’ll miss out on the federal American Opportunity Tax Credit. You can’t double-dip your tax advantages. Because the 529 is already tax advantaged, you can’t claim expenses paid with it for the federal tax credit. If possible, plan to pay $4,000 in tuition and books out of pocket each year and use the 529 for additional expenses and housing costs. Housing costs aren’t eligible for the federal tax breaks, but they are acceptable expenses for 529s.
  • If you get a state tax break for contributing to a 529, you may want to use that account as a passthrough account for things like rent. For instance, if you’re paying for off-campus housing, deposit your rent into the 529 to get the tax benefit, then withdraw it and pay your rent. Obviously, double-check the laws in your state before running with this idea. Utah, where I live, offers a 5% tax break for using the state’s 529 plan.
  • Books don’t need to be nearly as costly as they were just a decade ago. Online textbooks, rental services, and other methods can substantially reduce what used to be a several hundred dollar a semester expense.

Finally, while it’s not a cost-saving tip, you should project your income and expenses forward to make sure you will have enough in the bank to cover these things for the next several years.