10 Early Education Industry Trends to Know in 2026
The early education industry never stands still. Today's market looks drastically different than it did just a few years ago, and many providers are finding new opportunities to strengthen enrollment, improve operations, and differentiate themselves in an increasingly competitive landscape.
Drawing on insights from HINGE Advisors' 2026 State of the Early Education Industry webinar, featuring industry experts Kathy Ligon, Founder and CEO of HINGE Early Education Advisors, and Phil Vaccaro and Malavika Dhawan, Principals at EY-Parthenon, here are 10 trends shaping the childcare industry and what they mean for owners.
1. Childcare Center Utilization Has Declined Since Before the Pandemic
Survey data presented by Phil Vaccaro from EY-Parthenon indicates that the average percentage of available preschool seats filled has steadily declined in recent years, leaving many providers with more open spots than before the pandemic.
Fall 2019: approximately 70% ECE center utilization
Fall 2024: approximately 65% ECE center utilization
Fall 2025: approximately 61% ECE center utilization
These figures represent survey averages rather than industry-wide measurements, but they align with conversations happening throughout the sector. While individual markets vary significantly, lower utilization has become a real operational challenge facing many providers.
2. Staffing Is No Longer the Primary Growth Constraint
Following the pandemic, staffing shortages limited many providers' ability to enroll additional children. According to EY-Parthenon's research, that dynamic has shifted.
When center directors were asked why enrollment declined, only 14% cited staffing challenges, making it one of the least common reasons reported.
The labor market has stabilized considerably compared to previous years, allowing many providers to focus more attention on enrollment and operations rather than hiring.
3. Enrollment Competition Has Increased
The biggest enrollment challenge affecting providers is increased competition. The webinar highlighted several contributing factors:
Growth in licensed childcare capacity
Expansion of public pre-K programs
More childcare options available to families
Across more than 40 states, the number of licensed childcare centers increased from roughly 86,000 in 2021 to nearly 93,000 in 2024, representing approximately 2% compounded annual growth. Some states saw even faster expansion, including Massachusetts (13%) and Texas (8%).
Licensed home-based programs also increased during this period, though at a slower pace of 0.6% year over year.
Survey results also showed that nearly 70% of providers reported public pre-K availability had increased in their markets.
4. Remote Work Is Still Influencing Childcare Demand
Although many employers have returned to the office, flexible work arrangements remain common.
EY-Parthenon's research found that approximately 20–25% of U.S. workers are still working from home at least one day per week, changing how some families use childcare services and reducing demand in certain markets.
5. Demographics Are Shaping Long-Term Demand
Another long-term trend affecting enrollment is the size of the young child population nationwide.
The number of U.S. children ages 0-5 has declined from roughly 24 million in 2015 to about 22 million today. While projections suggest this population may remain relatively stable through 2030, birth rates will be an important factor influencing future enrollment demand.
6. Tuition Continues to Rise
Childcare providers have continued increasing tuition in response to higher operating costs. At the same time, there is an industry-wide acknowledgment that there is a limit to what families can afford to pay. According to the webinar:
Average tuition increases have been approximately 4.6% annually over the past 2 years
Roughly half of surveyed providers increased tuition by more than 5% in recent years
Vaccaro noted that these increases largely reflect rising wages and other operating expenses rather than discretionary pricing decisions.
7. Higher Costs Outpace Tuition Growth
Although many childcare providers have raised tuition in recent years, those increases often haven't kept pace with rising operating expenses. According to EY-Parthenon's survey:
70% of center directors said rising costs outpace tuition growth.
Only 3% of center directors said tuition growth exceeds cost increases.
48% of center directors reported being concerned about their ability to cover rising costs.
Labor, food and nutrition, and facility expenses were identified as the three largest drivers of cost increases. As these expenses continue to rise, providers must look for ways to improve efficiencies without compromising the quality of care or education they provide.
8. Stronger Enrollment Relies on Better Conversion, Not Just More Leads
Dhawan emphasized that many providers should focus less on generating more inquiries and more on improving how they convert prospective families into enrollments. She highlighted several strategies providers are using to improve enrollment conversion, including:
Hosting community events and open houses to build local awareness
Offering stronger referral incentives to encourage word-of-mouth marketing
Using CRM and lead management systems to identify exactly where families drop out of the enrollment process and improve those conversion points
Rather than simply tracking leads, providers should analyze their entire enrollment funnel to understand where prospective families disengage and hold leaders accountable for improving conversion rates.
9. Administrative Work Is Pulling Directors Away From Enrollment
A key operational takeaway from the webinar was that center directors often spend too much time on administrative work instead of supporting teachers, engaging families, and growing enrollment.
In one particular childcare group that EY-Parthenonanalyzed, 50-60% of center directors' time was spent on desk-based administrative tasks, including activities like rostering, capacity management, reporting, procurement, and communications.
Investing in automation and streamlining processes presents a significant opportunity for childcare organizations to redirect more director time toward activities that directly improve enrollment and retention.
10. Clearly Defined Differentiation Is Becoming More Important Than Ever
Parents increasingly expect more than a safe, reputable childcare center. Modern facilities, quality staff , and engaging curriculum have become baseline expectations.
Providers experiencing stronger enrollment often communicate a clear, distinctive value proposition, such as:
Montessori / Reggio, conscious discipline, or outdoor nature school approaches
Language immersion programs
Convenient services like healthy meals or free diapers
Flexible scheduling options
What makes a program unique should be able to be explained in a single, memorable sentence.
Partner With Early Education Industry Experts
The early education industry will continue to evolve, but this early childhood education industry report made one thing clear: providers that adapt to changing market conditions will be better positioned for both short- and long-term success. Understanding these trends is only the first step. Successfully responding to them requires a thoughtful strategy that aligns with your business goals and local market.
Founded in 2003, HINGE Early Education Advisors has helped childcare owners build stronger, more valuable businesses through strategic consulting, financial guidance, and industry expertise. Backed by more than 300 years of combined early education experience and more than $1 billion in business value created, the HINGE team helps owners improve performance today while preparing for growth or eventually selling their business.
Contact HINGE today to learn more about how we can help you achieve your goals.