The U.S. Department of Agriculture (USDA) announced that students eligible for free or reduced price school meals will no longer be charged processing fees starting in 2027.
Many school districts use cashless payment systems with processing companies, which can charge fees of up to $3.25 or 4% to 5% per transaction.
The big picture: Families qualifying for free or reduced lunch can end up paying 10 times the allowable amount for meals when factoring in processing fees.
- The new USDA policy, effective in 2027-2028, will lower costs for families with incomes under 185% of the federal poverty guidelines.
- Agriculture Secretary Tom Vilsack stated that the goal is to provide every child with access to healthy school meals at no cost, and the USDA will work towards that goal with Congress.
Driving the news: A report found that online school meal payments disproportionately affect low-income families, costing families upwards of $100 million annually in school lunch fees.
- The dominance of a few payment processing companies limits competition and negotiating power for school districts, impacting families’ ability to avoid excessive fees.
- Families often find processing fees burdensome and opt-out of using the systems, resorting to cash or check payments to avoid additional charges.
