A new federal rule will ban schools from charging low-income students transaction fees when their families electronically deposit money into their lunch accounts.
The policy was announced Friday by the Department of Agriculture, which administers the national program that serves billions of lunches and breakfasts to students every year.
The ban on “junk fees” will come into effect in the 2027-2028 academic year and applies to students eligible for free or reduced-price school meals – those whose annual household income is 185% or less of the federal poverty level, which is equivalent to up to $57,720 for a family of four.
The move follows a July report from the Consumer Financial Protection Bureau, a government agency that aims to ensure fairness in the marketplace. The report estimates that school meal processors collect more than $100 million in transaction fees annually.
The report notes that the fees disproportionately burden lower-income households, who typically make smaller, more frequent electronic deposits into their children’s accounts.
That means that while students who qualify for discounted school meals should be charged no more than $0.30 for breakfast and $0.40 for lunch, many families end up paying additional fees because of the costs they incur make every time they deposit money into their meal accounts.
The average processing fee is $2.37 for payment processors that charge a flat rate and 4.4% of the total transaction for those that charge a percentage, according to the Consumer Financial Protection Bureau report.
“The policy announced today will ensure fairness for all students who receive reduced-price meals, even if they pay online,” USDA said in a statement Friday.
Hunger relief advocates praised the decision.
“We’re thrilled,” said Marisa Kirk-Epstein, director of research and policy for the No Kid Hungry campaign at the nonprofit Share Our Strength. “This rule change is a huge win for parents trying to stretch every dollar. Eliminating these processing fees for free and reduced-price meals means one less burden on parents and allows kids to focus on learning and being kids.”
In September, a group of senators demanded in a letter that USDA take action on what they called “sham fees.”
“Every day, greedy payment processing companies are ripping off working families and stealing dollars meant to pay for children’s school meals to boost their profits,” reads the letter, which was signed by Senator Elizabeth Warren of Massachusetts and others Democratic Senators. , plus Sen. Bernie Sanders, I-Vt. “It is unacceptable that parents have to pay exorbitant fees just so their children can eat school lunch.”
Warren encouraged USDA to continue working toward eliminating fees.
“I have long said that junk fees for school meals simply should not exist, and this new action from the Biden-Harris administration is an important first step in making that a reality,” she said in a statement to NBC News on Monday. . “USDA must continue to work hard on this issue so that families are not squeezed for every cent.”
A USDA spokesperson told NBC News in an email that the agency’s goal is to eventually eliminate junk fees for all families, regardless of income level. Agriculture Secretary Tom Vilsack, who has advocated for free school meals for all children, called the ban on transaction fees a “big” step for some families.
“While today’s action to eliminate additional fees for lower-income households is a major step in the right direction, the most equitable path forward is to provide every child with free access to healthy school meals,” he said in a statement on Friday . “We will continue to work with Congress to achieve that goal, so that all children get the nutrition they need to reach their full potential.”
This article was originally published on NBCNews.com
