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USDA bans school lunch fees for low-income families
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USDA bans school lunch fees for low-income families

NEW YORK — The USDA has announced that students eligible for free or reduced-price school meals may not be charged processing fees starting in 2027.

School districts are currently working with processing companies to offer cashless payment systems to families. But companies may charge “processing fees” for each transaction. By law, students who are eligible for reduced-price meals cannot be charged more than 30 cents for breakfast and 40 cents for lunch. With processing fees, however, families can end up paying 10 times that amount. Processing companies charge as much as $3.25, or 4% to 5%, per transaction, according to a recent report by the Consumer Financial Protection Bureau.

For lower-income families who can’t afford to load large amounts in one go, processing fees can arrive weekly or even more frequently, driving costs out of proportion. Families who qualify for free or reduced-price lunch pay up to 60 cents on the dollar in fees when they pay for school lunches e-mail, according to the report.

The Department of Agriculture’s new policy goes into effect starting with the 2027-2028 school year. With this rule, USDA will reduce costs for families with incomes below 185 percent of the federal poverty guidelines, which equals $57,720 for a family of four.

“USDA and America’s schools share the common goal of feeding school children and giving them the fuel they need to learn, grow and thrive,” Agriculture Secretary Tom Vilsack said in a statement Friday. “While today’s action to remove extra fees for lower-income households is a major step in the right direction, the fairest way forward is to give every child free access to healthy school meals. We will continue to work with Congress to move toward this goal so that all children have the nutrition they need to reach their full potential.”

The USDA’s decision follows a CFPB report that found online payments for school meals predominantly affect low-income families. School lunch fees collectively cost families more than $100 million each year, according to the report.

The USDA has mandated that school districts inform families of their options since 2017, but even when parents are aware, paying by cash or check to avoid fees can be burdensome.

“It’s just extremely inconvenient,” said Joanna Roa, 43, who works at Clemson University in South Carolina as a library specialist and has two school-age children.

Roa said that when her son was in first grade and saw the $3.25 per transaction fee for lunch account transactions, she and her husband decided to send him to school with packed lunches.

“I was expecting a dollar here and there,” she said. “But $3.25 per transaction, especially here in rural South Carolina, where the cost of living is much lower — as are wages — is a lot.”

Roa said that packing lunch for two children every day became a burden in both time and effort for two working parents. For the past two years, thanks to surplus funds, her school district has offered free school lunches, which has changed the equation, but Roa said that could end at any time.

In its analysis of the 300 largest US public school districts, the CFPB found that 87 percent of sampled districts contract with payment processors. In those districts, companies charge an average of $2.37, or 4.4 percent of the total transaction, each time money is added to a child’s account.

While payment companies argue that school districts can negotiate fees and rates before accepting contracts, the CFPB found that complex company structures “can insulate companies from competition and make school districts less likely to negotiate.” According to the report, just three companies – MySchoolBucks, SchoolCafe and LINQ Connect – dominate the market.

Without the ability to choose which company to work with, “families have fewer ways to avoid harmful practices,” the agency said, “including those that may violate federal consumer protection law.”

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