The U.S. Department of Agriculture announced that starting in 2027, students eligible for free or reduced-price school meals will no longer be charged processing fees, also known as junk fees.
The district is currently working with a processing company to provide a cashless payment system for families. However, companies can charge a “processing fee” for each transaction. By law, students eligible for reduced-price meals cannot be charged more than 30 cents for breakfast and 40 cents for lunch. But with processing fees, families could end up paying 10 times that amount. Processing companies charge as much as $3.25 per transaction, or 4% to 5%, according to a recent report from the Consumer Financial Protection Bureau.
For low-income households who cannot afford to load large amounts at once, fees may arrive weekly or more frequently, increasing costs disproportionately. The report found that families eligible for free or reduced-price school meals are paying as much as 60 cents on every dollar spent electronically paying for school meals.
The USDA’s new policy will go into effect starting with the 2027-2028 school year. Under the rule, the USDA would reduce costs for families with incomes below 185% of the federal poverty guidelines, which equates to $57,720 for a family of four.
“The Department of Agriculture and schools across America share a common goal of nourishing schoolchildren and giving them the fuel they need to learn, grow, and thrive,” Agriculture Secretary Tom Vilsack said in a statement Friday. said. “Today’s action to eliminate the surcharge for low-income families is a big step in the right direction, but the fairest path forward is to ensure all children have access to free and healthy school meals. We will continue to work with Congress to advance this movement to ensure that all children receive the nutrition they need to reach their full potential. We are working towards that goal. ”
The USDA’s decision follows a CFPB report that found online school lunch payments primarily impact low-income households. School lunch costs cost families more than $100 million annually, the report found.
The USDA has required school districts to notify families of their options since 2017, but even if parents are aware, having to pay by cash or check to avoid fees can be burdensome. .
“It’s just inconvenient,” said Joanna Lore, 43, a library specialist at Clemson University in South Carolina and the mother of two school-age children.
Lore said her son is in first grade and after seeing the $3.25 fee per transaction on lunch accounts, she and her husband decided to send their son to school with lunch instead. Ta.
“I was expecting a dollar here and there,” she said. “But $3.25 per transaction is a lot, especially here in rural South Carolina, where the cost of living is much lower, as is the salary.”
Lore said that for working parents, preparing lunch for two children every day is a burden both in terms of time and effort. For the past two years, extra funds have helped her district provide free school meals, which has changed the equation, but Lore said that could end at any time.
The CFPB surveyed 300 of the nation’s largest public school districts and found that 87% of the sampled districts contracted with payment processors. Within these districts, companies charge an average of $2.37, or 4.4% of the total transaction amount, each time money is added to a child’s account.
Although payment companies claim they can negotiate fees and charges before school districts agree to contracts, the CFPB notes that complex corporate structures “isolate companies from competition and make school districts less likely to negotiate.” It was discovered that there is a possibility that According to the report, only three companies dominate the market: MySchoolBucks, SchoolCafe, and LINQ Connect.
Without the ability to choose which companies to work with, “families have fewer ways to avoid harmful practices that may violate federal consumer protection laws,” the agency said.
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