First in nation program will provide financial assistance to New Yorkers struggling to afford quality child care
City Hall – Speaker Christine C. Quinn, Council Member Jessica S. Lappin, the Neighborhood Trust Financial Partners and child care advocates today announced the launch of a subsidized loan program that will help provide middle class families with access to high quality childcare.
The Middle Class Child Care Loan Initiative, first announced in partnership with Council Member Jessica S. Lappin in Speaker Quinn’s 2012 State of the City address, is the first program in the nation designed specifically to help middle class New Yorkers pay for child care.
“Early childhood education is one of the most important investments a parent can make,” said Speaker Christine C. Quinn. “But too often, quality child care is out of reach for middle class families. The Middle Class Child Care Loan Initiative is a smart program that will help parents pay for child care and give New York City’s next generation a jump start on their education.”
New York City has one of the highest child care costs in the entire country. Although the Administration for Children’s Services offers subsidized child care to families that fall below 275 percent of the federal poverty level, there are no programs in place to help middle class families.
The Middle Class Child Care Loan Initiative is part of the City Council’s on-going commitment to ensure all New Yorkers have access to quality child care. Under Speaker Quinn’s leadership, 4,400 child care slots for low income families have been preserved and universal Pre-K has expanded by 10,000 full day seats.
“As a working mom, I understand just how critical affordable child care is for middle class parents – and for their kids,” said Council Member Jessica S. Lappin. “Any investment in early education is a sound one, and hopefully this innovative program will pay great dividends.”
Early childcare education sets a strong foundation for a child’s future development, and much like subsidized college loans, Middle Class Child Care loans are an investment in children’s future. The pilot program will offer 6 percent loans of up to $11,000 to parents with children between the ages of two and four.
The City Council, child care providers, advocates and the New York City Child Care Resource and Referral Consortium will conduct outreach to prospective participants about the program.
“Early childhood education is a sound investment that pays dividends well into adulthood. But when child care costs average $13,000 per year, too many parents struggle to afford the very services that can help secure a bright future for their children,” said Richard R. Buery, Jr., The Children’s Aid Society. “The Middle Class Child Care Loan Initiative will help families pay for high quality child care, and I applaud Speaker Quinn and the City Council for their efforts to help New York City families.”
Qualified applicants must have an annual income of $80,000 to $200,000, a credit score of at least 620 and attend a free financial counseling session with a Neighborhood Trust counselor. The financial counselor will conduct a comprehensive review of the applicant’s finances to assess the loan application.
Once any credit, savings or budgeting issues are identified and remedied, interested parents will then fill out a loan application and be referred Neighborhood Trust Federal Credit Union for final loan underwriting, approval and disbursement.
“Neighborhood Trust Financial Partners is thrilled to join Speaker Quinn and the New York City Council in this exciting partnership,” said Justine Zinkin, CEO of Neighborhood Trust Financial Partners and Neighborhood Trust Credit Union. “Neighborhood Trust has a nearly 20 year history in New York City of helping individuals achieve their financial goals by providing financial counseling and support services. The Middle Class Child Care Loan Initiative combines two important tools to help families achieve their children’s long-term education goals – access to early childhood education through a responsible low interest loan and high quality financial education and planning.”
“Early childhood education is crucial to success in school and beyond,” said Center for Children’s Initiatives Policy Director Betty Holcomb. “But with child care costs averaging $13,000 per year, it’s more than any individual can afford on their own, and for two-year-olds, the bill can run even higher. The Middle Class Child Care Loan Initiative aims to help families cover the cost of child care, and I thank Speaker Quinn and the City Council for their work to keep children learning and parents earning.”
Approved parents will have childcare payments disbursed directly to their daycare provider and will have on-going support from their financial counselor to encourage successful debt management. Parents will make interest-only payments until their children reach kindergarten age.
The Middle Class Child Care Loan Initiative pilot will provide financial assistance to 40 families in its first year.
The City Council allocated $300,000 to Neighborhood Trust Financial Partners to cover loan loss reserves, interest rate subsidies, loan portfolio servicing, reporting and overall pilot administration.