The U.S. Department of Agriculture announces a significant change to school meal programs, aiming to alleviate financial burdens on low-income families.
At a Glance
- USDA to eliminate processing fees for free or reduced-price school meals starting 2027-2028 school year
- Current fees can cost families up to $3.25 per transaction
- Policy targets families with incomes under 185% of federal poverty guidelines
- Change follows Consumer Financial Protection Bureau report on financial burden of school meal payments
- Agriculture Secretary Tom Vilsack emphasizes goal of providing free meals to all children
USDA Takes Action to Support Low-Income Families
In a move aimed at supporting low-income families, the U.S. Department of Agriculture (USDA) has announced the elimination of processing fees for electronic transactions of free or reduced-price school meals. This change, set to take effect in the 2027-2028 school year, addresses a longstanding issue that has been placing additional financial stress on families already struggling to make ends meet.
Currently, payment processors impose fees that can cost families as much as $3.25 per transaction or 4% to 5% of the meal cost. For families eligible for reduced-price meals, who should pay no more than 30 cents for breakfast and 40 cents for lunch, these fees can result in paying up to 60 cents per dollar in additional costs.
Impact on Low-Income Families
The new policy targets families with incomes under 185% of federal poverty guidelines, which equates to $57,720 for a family of four. These families, who are already facing financial challenges, have been disproportionately affected by the processing fees associated with cashless payment systems for school meals.
“USDA and schools across America share the 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. “While today’s action to eliminate extra fees for lower-income households is a major step in the right direction, the most equitable path forward is to offer every child access to healthy school meals at no cost. We will continue to work with Congress to move toward that goal so all kids have the nutrition they need to reach their full potential.”
The USDA’s decision follows a report by the Consumer Financial Protection Bureau (CFPB) that highlighted the financial burden of online school meal payments on low-income families. The report revealed that school lunch fees cost families over $100 million annually, a significant sum that could be better spent on other essential needs.
Challenges with Current Payment Systems
Since 2017, the USDA has required school districts to inform families of payment options, but cash or check payments can be inconvenient for many. The CFPB found that 87% of the largest public school districts contract with payment processors, with average fees of $2.37 or 4.4% per transaction.
“It’s just massively inconvenient,” Joanna Roa, 43, who works at Clemson University in South Carolina as a library specialist and has two school-aged children, said. “A dollar here and there, I expected. But $3.25 per transaction, especially here in rural South Carolina where the cost of living is a lot lower — as are the salaries — is a lot.”
The market for these payment systems is dominated by three companies: MySchoolBucks, SchoolCafe, and LINQ Connect, limiting families’ options to avoid high fees. The CFPB noted that complex company structures may prevent school districts from effectively negotiating fees, potentially violating federal consumer protection laws.
