Early childhood education and care (ECEC) participation is a key mechanism for narrowing the achievement gap between children from different family backgrounds. ECEC particularly benefits children with immigrant backgrounds by providing earlier exposure to the host country language, which boosts later school performance. We employ family fixed-effects regression models and high-quality Finnish register data to examine the association between the duration of the child home care allowance (HCA)—a special feature of Finnish family policy and the main counterfactual for child care services—and school success (as measured by literacy grade at the end of elementary education), parental education, and ethnic origins. In addition to showing that the duration of the HCA period is negatively linked to the school success of children of less educated mothers, this study shows that this duration is negatively associated with the school success of children of immigrants in universal ECEC.