School Lunch Fees Waived for Low-Income Families

USDA To Eliminate Processing Fees for Free and Reduced Price School Meals by 2027

In a significant step forward for equitable access to education, the U.S. Department of Agriculture (USDA) has announced that starting in the 2027-2028 school year, students who qualify for free or reduced-price school meals will no longer be subject to processing fees. This move is aimed at alleviating the financial burden that registering and maintaining cashless meal payment accounts currently places on families facing economic hardships.

A Closer Look at School Meal Fees

Many school districts already utilize processing companies that facilitate cashless payment systems for families wishing to fund their children’s school meal accounts. Under existing laws, students eligible for reduced-price meals can be charged no more than 30 cents for breakfast and 40 cents for lunch. However, the introduction of processing fees has made these meals significantly more expensive for low-income families. According to a report from the Consumer Financial Protection Bureau (CFPB), processing fees can balloon the cost, with families often paying transaction fees that amount to up to 10 times the actual price of the meals. Fees can range anywhere from .25 to about 4-5% of the total transaction amount, creating an undue financial load on households that are already struggling.

Families that find it challenging to fund their children’s accounts with larger sums can incur these processing fees multiple times a week. According to the CFPB’s findings, families receiving free or reduced-price lunches may be burdened with fees amounting to as much as 60 cents for every dollar spent on electronically purchased meals.

Impact on Low-Income Families

For many families with low incomes, the strain of processing fees can quickly turn a seemingly manageable expense into a financial crisis. Joanna Roa, a library specialist at Clemson University and a mother of two, shared her experience with school lunch fees. When faced with a .25 fee for funding her son’s lunch account, she and her husband made the difficult decision to begin packing lunches daily. “A dollar here and there, I expected,” she said, “But .25 per transaction, especially here in rural South Carolina where the cost of living is a lot lower, is a lot.”

These constraints often push families to revert to packing lunches themselves, a task that can be monumentally burdensome for working parents juggling multiple responsibilities. Fortunately, recent policies, including the move to provide free lunches through surplus funds, have eased some of this burden. However, there is no guarantee that this support will last.

USDA's Commitment to Equity in School Meals

Agriculture Secretary Tom Vilsack emphasized the significance of the new USDA policy, stating, “The USDA and schools across America share the common goal of nourishing schoolchildren and giving them the fuel they need to learn, grow, and thrive.” He views eliminating processing fees as a fundamental step toward this mission, but advocates for an even more ambitious goal: providing all children access to healthy meals without any cost.

This decision comes amid growing concerns over the financial impact of online meal payment systems, particularly on low-income families. The CFPB’s report highlights that lunch fees across the country cost families upwards of 0 million annually. The USDA has required school districts to inform families of their payment options since 2017, yet many parents still find the prospect of avoiding fees—often through cash or check payments—unrealistic and laborious.

Systemic Challenges in School Payment Processing

Delving deeper into the world of meal payment processing reveals another layer of confusion and challenge. With 87% of the largest school districts in the nation contracting payment processors, families often have little control over transaction fees. The CFPB’s findings suggest that while school districts can technically negotiate these fees, the complexity and market dynamics make it challenging to foster competition among providers. Notably, three companies—MySchoolBucks, SchoolCafe, and LINQ Connect—dominate the market, limiting options for families to avoid these fees.

The implications of this monopoly extend beyond mere inconvenience; families with fewer choices for payment processors face heightened vulnerability to practices that can violate consumer protection laws.

The Road Ahead

The upcoming policy change marks a promising transition for families grappling with the rising costs of school lunches. However, with the USDA planning to work with Congress to ensure equitable meal access, more substantial legislative action will be vital for achieving long-term solutions that can guarantee every child’s right to nutritious meals without financial worry.

As we look ahead to 2027, it’s crucial not only to support these families but also to foster a system where healthy meals are available to all children, regardless of their financial status. This policy change represents hope for many, reminding us that nourishing our children should be a shared community responsibility, with financial accessibility at its core.