Trump Administration Proposes Repealing Biden-Era Child Care Subsidy Rule

Citing potential for fraud, the Trump administration seeks to undo a policy that required states to pay subsidies based on enrollment rather than attendance.

Published on Mar. 4, 2026

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The Trump administration has proposed repealing a Biden-era rule that required states to change how they pay out child care subsidies, citing the potential for fraud. The rule mandated that states pay subsidies upfront based on enrollment rather than attendance, which had been a challenge for many child care providers serving low-income communities. While fraud is rare, the administration argues the new policy created vulnerabilities. However, child care advocates worry the focus on fraud could undermine progress in stabilizing the industry.

Why it matters

The proposed repeal could jeopardize the financial stability of child care providers, particularly those serving low-income communities. The Biden-era rule aimed to provide more predictable funding for providers, many of whom struggle to stay afloat due to the industry's thin profit margins. Advocates argue that a focus on preventing rare instances of fraud should not come at the expense of supporting an essential service that is crucial for working families and the country's future.

The details

The Biden administration's rule required states to pay child care subsidies upfront based on enrollment rather than attendance. This was a game-changer for many providers, giving them more predictable funding, especially during the COVID-19 pandemic when attendance often dropped significantly. However, the Trump administration argues this policy created vulnerabilities and made fraud easier. They cite a recent case of alleged fraud in Minnesota as justification for the proposed repeal, even though such instances are rare. Child care providers and advocates worry the focus on fraud could derail progress in stabilizing the industry and providing reliable care, especially in low-income communities.

  • In January 2026, the Department of Health and Human Services announced the proposed repeal of the Biden-era child care subsidy rule.
  • Last year, Missouri's Republican legislature approved making child care subsidy payments upfront based on enrollment, but the state later announced it needed more time to ensure the new system works correctly and secure long-term funding.

The players

Michelle Wright

Runs two child care centers in Southwestern Illinois, just across the Mississippi River from St. Louis. Ninety percent of the families she serves qualify for child care subsidies, which the state pays out based on attendance.

Denise Wiese

The executive director of Lemay Child and Family Center in St. Louis County, Missouri. She has been looking forward to changes in how subsidies are paid, including a new state policy to make payments upfront based on enrollment.

Jim O'Neill

The former Deputy Secretary of the Department of Health and Human Services, who announced the proposed repeal of the Biden-era child care subsidy rule.

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What they’re saying

“You OK?”

— Michelle Wright, Child care center owner

“It's wintertime. It's Midwest.”

— Michelle Wright, Child care center owner

“That staff comes ready to work. Maybe spent gas, maybe took a Uber or a bus to get here. And then six kids are out, and I know the numbers are down. I have to send their staff home.”

— Michelle Wright, Child care center owner

“We have to take care of the children in our communities. They're the ones that are going to lead this country and lead the state 30 years from now.”

— Denise Wiese, Executive Director, Lemay Child and Family Center

“Those policies weakened accountability and made fraud easier, not harder.”

— Jim O'Neill, Former Deputy Secretary, Department of Health and Human Services (Department of Health and Human Services)

What’s next

The Department of Health and Human Services will decide whether to finalize the proposed repeal of the Biden-era child care subsidy rule.

The takeaway

The Trump administration's focus on preventing rare instances of child care fraud could undermine efforts to stabilize the industry and provide reliable, high-quality care, especially in low-income communities. Advocates argue that supporting the essential service of child care should be the priority, not rolling back policies that have helped many providers stay afloat.