The American Families Plan Explained

In his speech to Congress last week, President Joe Biden unveiled his plan to expand access to early education and support families through paid leave. Nearly 700,000 parents left the workforce in 2020, with two-thirds of those parents being mothers. The American Families Plan will invest billions of dollars into Universal Pre-K and childcare, increasing wages for providers and delivering much-needed financial relief to families, which could be the key to rebuilding the economy. 

What this means for parents

In a 2020 study by Winnie, 1 in 4 parents relied on a work-from-home parent as their primary caregiver and cited affordability as a factor in that decision. Biden’s plan will ensure low and middle-income families spend no more than 7% of their household income on childcare and guarantee all three and four-year-olds access to free Universal Pre-K. The American Families Plan would also provide the following benefits to families:

• Extension of the expanded child tax credit until 2025: This has the potential to lift nearly 5 million children out of poverty. 
• Free college: President Biden’s new plan would cover the first two years of community college. This includes both adults and new high school graduates. 
• Free preschool: Under the plan, all three and four-year-olds would be eligible for free Universal Pre-K, which can close the achievement gap and level the playing field for children. 
• Affordable childcare: President Biden has said he will prioritize childcare, making it more accessible for families through subsidies and tax credits. 
• Paid leave: Although it will be phased in over time, The American Families Plan hopes to provide up to twelve weeks of paid medical and family leave. 
• Food assistance: The President also plans to expand free and reduced-price lunch programs to combat child hunger and food insecurity.

What this means for providers

During COVID-19, many schools closed their doors and shifted to virtual learning while childcare and early education providers remained open. The early education industry, comprised of mostly women and women of color was considered essential, despite historically being underpaid and undervalued. With the spotlight finally on caregiving as the backbone of our economy, the following aspects of President Biden's plan will directly benefit providers. 

• Student loan forgiveness: President Biden has proposed forgiving $10,000 in student loan debt, which could help childcare providers immensely. 
• Free college tuition: The plan would also cover two years of community college tuition for new high school graduates as well as adults. This would allow childcare providers to further their education and advance their careers. 
• Increased minimum wage: With many childcare providers making minimum wage, Biden hopes to increase wages to $15 an hour.
• Increased access to funding: With plans to roll out a Universal Pre-K program, there will be more funds available for scholarships and training, and to provide more job opportunities in early education.

Why invest in early education? 

Studies have shown that affordable childcare has positive long-term effects on a family’s financial future. Over the course of an entire lifetime, access to affordable care can increase a family’s earnings by up to $94,000. Additionally, when we recognize the education of children under five as a public good, on equal footing with K-12 education, we level the playing field for children. High-quality preschool education can have a profound impact on a child’s development and future academic success. Ensuring that all children have access to the same resources, regardless of income, will help to close the achievement gap and prepare children for Kindergarten and beyond. 

What’s next

The plan is not yet a done deal; final approval is still months out. The next step is to get the support of Congress and changes to the plan might be made along the way. Winnie will be keeping a close eye on updates to this promising plan as they become available.