Ban on School Lunch Processing Fees to Begin in 2027

Starting in 2027, students eligible for free or reduced-price school meals will not have to pay processing fees, as announced by the Department of Agriculture.

These fees, commonly known as “junk fees,” can greatly increase the cost of reduced-price meals for lower-income students under the current system.

According to the law, eligible students should only be charged a maximum of 30 cents for breakfast and 40 cents for lunch for reduced-price school meals.

However, since most school districts utilize processing companies for cashless payment systems, the fees associated with these services are not covered under the limit, requiring families to pay more than the mandated prices.

A report by the Consumer Financial Protection Bureau (CFPB) revealed that some processing companies can charge up to $3.25 per transaction.

The CFPB report examined the 300 largest public school districts in the country and found that 87% of sampled districts use payment processor companies. On average, families are charged $2.37 each time money is added to a child’s account, totaling to an estimated $42 per year per child for school lunch fees.

The Department of Agriculture Secretary Tom Vilsack stated that while eliminating junk fees is a positive first step, a more effective system should be put in place to support all school-aged children.

He emphasized, “The most fair approach is to provide every child with access to healthy school meals at no cost, and we will continue working with Congress towards that objective so that all children receive the nutrition they need to thrive.”

Since 2017, the Department of Agriculture has required families to be informed about all payment options available, including cash, check, and electronic payments or their equivalents.

The CFPB’s review also revealed that payment processing companies permit school districts to negotiate fees and rates before entering into contracts.

However, the review also highlighted that the complexity of company structures and market dominance by three companies “may shield companies from competition and discourage school districts from negotiating.”

As per the CFPB, without the ability to choose which payment processing company to engage with, families have limited options to avoid detrimental practices.

The Associated Press contributed to this report.