Costs and Benefits of Preschool vs College

  • September 4, 2019
  • by Emily
Costs and Benefits of Preschool vs College

Preschool is expensive—in 23 states, full-time childcare for a 4-year-old costs more than in-state tuition at a public university. We all expect college to be expensive, and many parents spend over a decade saving for their children’s college fund. There are federal programs, like the 529 plans, to help save for college. 

But what about preschool? Few teenagers are saving money for the theoretical child they will be sending to preschool in 10 - 20 years. In general, the cost of preschool does not get nearly the same attention as the cost of college, even though it can be as expensive if not more expensive than college. On the other hand, the benefits of a high-quality preschool don’t get much attention, either. 

The Benefits of Preschool

The most obvious benefit of preschool is that it allows both parents to work—in fact, preschool is often just referred to as ‘childcare.’ But whether we are investing in free preschool for all children as a society or wondering if preschool is a good idea for our own kid, keep in mind that preschool is about more than parking your kid somewhere so you can work (though that is an extremely important part of preschool, of course, and a benefit that doesn’t enter into the college equation). 

Research has conclusively shown that kids who go to preschool are better prepared for Kindergarten. Kids who go to preschool have a lower risk for some serious illnesses. They do better throughout school and generally have better outcomes in life, although the difference between attending preschool and not attending preschool is greater the lower the child’s income. 

The challenge in determining how valuable preschool is, however, has to do with accounting for quality. High-quality kindergarten teachers have been shown to have sustaining, life-long effects on both earning potential as well as other measures of success, like how likely someone is to be arrested or to graduate from college. Assuming the effects are similar for preschool, sending your kid to a high-quality preschool will mean an average earnings bump for your kid as a young adult of around $1,000 per year—that’s way less than the bump from earning a college degree, but still a significant boost that compounds over time. 


High Quality Preschool


Higher earnings

$1,000 per year in 20s, the effect seems to grow as people get older

Increase of 56% over non-college grads

More likely to save for retirement



Less likely to be single parents

Yes Yes

More likely to go to college




The Benefits of College

Compared to preschool, the cost-benefit analysis of a college degree has been extensively studied and is fairly indisputable. College graduates earn 56% more than people with only a high school education, they are dramatically more likely to be employed, even during a recession, and they are more likely to own homes and have retirement savings. Indeed, one of the key benefits of a preschool education is that it increases the likelihood that a child will graduate from college. 


The bottom line is that investing in education, whether you’re talking about yourself, your children or society in general, is a good investment that will pay off financially. The effects are cumulative. You get the most out of education investment if your kids have high-quality education that starts in preschool and is continued through college and beyond. 

Preschool is really expensive, but there are some ways the federal government tries to help, such as through dependent care savings accounts that allow preschool to be paid from pre-tax dollars. Keep in mind that flexible spending accounts can reduce your social security benefit

Want to see how a $1,000 per year income bump in your 20s influences your net worth at different stages in life? Use Wealth Meta’s Income and Spending Simulator to find out. 

The post Costs and Benefits of Preschool vs College is part of a series on personal finances and financial literacy published at Wealth Meta. This entry was posted in Family and Finances
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