USDA Removes Meal Processing Fees for Schools from 2027-2028

The U.S. Department of Agriculture (USDA) is set to eliminate processing fees for free and reduced-price school meals starting in 2027, but some question why the change will take so long to implement.

At a Glance

USDA to eliminate processing fees for free and reduced-price school meals in 2027-2028 school year
Current fees can be as high as $3.25 or 4% to 5% per transaction
Change aims to help families with incomes under 185% of federal poverty guidelines
School lunch fees cost families over $100 million annually

USDA Takes Action on School Meal Fees

The U.S. Department of Agriculture has announced a significant change in school meal policies, set to take effect in the 2027-2028 school year. Students eligible for free or reduced-price school meals will no longer face processing fees for these essential nutrition programs. This move comes in response to findings from the Consumer Financial Protection Bureau (CFPB) that highlighted the severe impact of these fees on low-income families.

Currently, digital payment processors charge fees for cashless payment systems, which can significantly increase costs for families already struggling to make ends meet. These fees can be as high as $3.25 or 4% to 5% per transaction, leading some families to pay up to 60 cents per dollar in fees alone. For families living on tight budgets, these additional costs can make the difference between putting food on the table or going hungry.

.@SecVilsack today announced that students with free & reduced school meals must not be charged junk fees to ensure students can access breakfast and lunch without extra charges. This will lower costs for qualifying families effective 2027. https://t.co/aMjaQHps0j

— Dept. of Agriculture (@USDA) November 1, 2024

Impact on Low-Income Families

The new policy aims to lower costs for families with incomes under 185% of federal poverty guidelines, which currently equates to $57,720 for a family of four. By law, students eligible for reduced-price meals should not be charged more than 30 cents for breakfast and 40 cents for lunch. However, the addition of processing fees has been pushing the real cost of these meals well beyond these limits.

“It’s just massively inconvenient,” said Joanna Roa, 43, who works at Clemson University in South Carolina as a library specialist and has two school-aged children. “A dollar here and there, I expected,” she said. “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.”

Families with lower incomes, who often cannot afford to load large amounts into their accounts at once, face frequent processing fees, further increasing their costs. This creates a cycle where those who can least afford it end up paying the most in fees, simply to access the reduced-price meals they are entitled to by law.

Market Dominance and Lack of Options

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. The market is dominated by three companies: MySchoolBucks, SchoolCafe, and LINQ Connect, which limits 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.

“USDA and schools across America share the common goal of nourishing schoolchildren and giving them the fuel they need to learn, grow and thrive,” said Agriculture Secretary Tom Vilsack 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.”

While the USDA’s decision is a step in the right direction, many are questioning why it will take until 2027 to implement. With school lunch fees costing families over $100 million annually, according to the CFPB report, the delay means that low-income families will continue to bear this burden for several more years. The timeline for implementation raises concerns about the urgency of addressing this financial strain on vulnerable households.