Parents of students who are eligible for reduced-price school meals can no longer be charged processing or “junk” fees along with the cost of the meal beginning in the 2027-28 school year, officials announced earlier this month.
The policy, announced by U.S. Agriculture Secretary Tom Vilsack on Nov. 1, aims to lower costs for those who make roughly $57,720 or less as a family of four. Officials estimate that the decision will benefit more than 1 million students who receive reduced-price meals served through the School Breakfast and National School Lunch Program.
Students who are eligible for reduced-price meals cannot be charged more than 30 cents for breakfast and 40 cents for lunch by law. But a federal report released in July found that when parents pay schools for their students’ meals, they often have to shell out for extra fees—as much as 60 cents for every dollar—that go to third-party payment processing companies.
Parents who use the platforms could spend as much as $42 in a week on transaction fees alone—an extra burden on low-income families who often make smaller payments more frequently. Families pay more than $100 million in fees each year, the U.S. Department of Agriculture’s Food and Nutrition Service wrote in a memo to schools.
The memo urged districts to modify their systems as soon as possible. In a news release, the department said a delayed start would give administrators across the country time to make the change.
The rollout of this change will rely on vendor cooperation and participation, said Tara Thomas, the government affairs manager for AASA, The School Superintendents Association.
Companies provide an online portal for parents to make payments—most commonly for school lunches but also for field trips and other expenses—to their child’s school. Federal law does require schools to offer fee-free options for payments, like through cash or check, but most parents prefer to make online payments, Thomas said.
Those companies, Thomas said, will now have to differentiate in their systems between the students who pay full price for school lunches and can still be charged processing fees, and the students who pay reduced price for lunches and cannot be charged any fees.
And they will also have to determine who will now pick up the cost of eligible students’ lunch fees. The department memo emphasizes that these fees should not be shifted to students paying full price for meals.
Thomas said some wealthy districts cover all processing fees to remove the financial burden on families. But many districts will have a hard time making such a cost work within their already tight budgets, she said.
It’s possible some companies will decide to simply waive all fees for the small subset of students who receive reduced-price meals instead of expecting districts to cover those charges, she said.
“Our hope is that vendors will do the right thing here and exempt these families,” she said. Otherwise, “the cost is going to be on the school districts that already can barely operate these programs in the margins that they currently have.”
Could universal free school meals be next?
The department issued its memo days before the presidential election, and it’s unclear how the incoming Trump administration will carry out this change. Thomas said she doesn’t expect any disruption, as the memo was a clarification of existing policy on reduced-price meals and not a proposed new rule.
For the Biden administration at least, this announcement is a “first step,” the department said, adding that the goal is eliminating processing fees for all families regardless of income level.
“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,” Agriculture Secretary Tom Vilsack said in a prepared statement.
Nationally, there has been a push to provide free meals to all students, regardless of their family’s income. Congress temporarily made meals free to all students during the pandemic, expiring in 2022. At least eight states have passed universal free lunch laws—including one signed last year by Minnesota Gov. Tim Walz, which made free school meals an issue in the presidential election.
Research has found that free meals are an effective way to combat hunger and improve educational outcomes—and are linked to lower discipline rates.
About 30 million school children are served lunch each school day, the department estimates.
