USDA make new policy banning school lunch fees for low-income families

NEW YORK CITY, New York: Starting in the 2027-2028 school year, the U.S. Department of Agriculture (USDA) announced a new policy allowing low-income families to avoid processing fees on school meal payments.

Currently, schools use third-party processors for cashless payment systems, which often add fees to each transaction. These fees, sometimes reaching US$3.25 or up to 5 percent of each transaction, can increase meal costs for families significantly-sometimes to as much as 60 cents on the dollar, according to a report from the Consumer Financial Protection Bureau (CFPB).

For families qualifying for free or reduced-price meals, this means paying far more than the capped rates of 30 cents for breakfast and 40 cents for lunch set by law. For lower-income families unable to pay large sums at once, these fees can accumulate weekly or even more frequently, leading to added financial strain.

The USDA's new rule aims to relieve these burdens, benefiting families with incomes under 185 percent of federal poverty guidelines, which translates to an annual income of $57,720 for a family of four.

Agriculture Secretary Tom Vilsack highlighted that while eliminating these extra fees is a significant step, the ultimate goal remains providing free meals to all students. "The most equitable path forward is to offer every child access to healthy school meals at no cost," Vilsack stated, committing to work with Congress to make this a reality.

The USDA's decision follows findings from the CFPB report, which estimated that school lunch fees collectively cost low-income families over $100 million each year. The CFPB also discovered that 87 percent of the 300 largest school districts use payment processors with complex fee structures, dominated by just three companies: MySchoolBucks, SchoolCafe, and LINQ Connect. This lack of competition limits families' options to avoid fees, leading to concerns about potential consumer protection violations.

Joanna Roa, a mother of two from rural South Carolina, shared her experience of high transaction fees that led her to pack lunches for her children instead. Although her school district recently began providing free lunches with surplus funds, she expressed concern that this benefit could end at any time, forcing her to return to paying fees.

By eliminating these fees, the USDA hopes to ease financial stress on families, allowing them better access to school meals without the burden of extra costs.