USDA to Eliminate School Meal ‘Junk Fees’ for Low-Income Families

A new policy from the U.S. Department of Agriculture (USDA) will prohibit schools from charging online “junk fees” to low-income families for meals provided through the School Breakfast Program and the National School Lunch Program starting in the 2027-28 school year.

The USDA’s announcement on Friday marks a critical step toward making school meals more affordable for eligible students, particularly those who qualify for free or reduced-price meals.

Although this policy initially applies only to these students, the USDA aims to expand the ban to cover all families in the future.

“Today’s action is a first step,” the USDA stated, adding that it will assess the impact of fees on all families with the goal of eventually eliminating online junk fees for every student, regardless of income.

These junk fees typically come in the form of online processing charges added when parents deposit money into school meal accounts, as schools increasingly move toward cashless payment systems.

According to a July report from the Consumer Financial Protection Bureau (CFPB), nearly 87% of 25,000 sampled school districts have contracts with payment processors, allowing families to make electronic payments for various school expenses.

These transactions often carry an additional fee—averaging $2.37 or 4.4% of the transaction—adding unexpected costs to families already paying for their children’s meals.

The USDA highlighted that by law, students eligible for reduced-price meals should not pay more than 30 cents for breakfast or 40 cents for lunch.

However, online processing fees can push costs beyond these limits, impacting families that rely on these programs to afford nutritious meals for their children.

The new policy is designed to ensure that the 1 million children who receive reduced-price meals won’t face extra costs for accessing their meals.

“This action lays the foundation to eliminate these junk fees for all 30 million children receiving healthy meals at school every day,” stated Lael Brainard, the national economic advisor, underscoring the USDA’s goal of further expanding this benefit.

Agriculture Secretary Tom Vilsack praised the USDA’s move to eliminate junk fees, calling it an essential step forward in ensuring equitable access to school meals.

However, he stressed that the most fair and effective approach would be to provide healthy school meals to every child at no cost, a goal he pledged to pursue with Congress in the months to come.

Are All Angles Covered?

The USDA’s decision to prohibit online “junk fees” for low-income families participating in the School Breakfast Program and National School Lunch Program is a commendable step toward improving access to affordable school meals.

However, the policy and its broader implications warrant scrutiny, particularly regarding its delayed implementation, limited scope, and reliance on cashless systems.

While the policy is undoubtedly well-intentioned, its implementation starting in the 2027-28 school year raises concerns about the urgency of addressing the financial burden these fees impose on low-income families. Families currently grappling with the cumulative costs of these online processing fees will continue to face unnecessary financial strain for several more years.

The delay contradicts the USDA’s acknowledgment of the immediate negative impact these fees have on families relying on reduced-price meals. Policymakers should prioritize faster execution to alleviate this burden promptly.

Another critical issue lies in the policy’s initial limitation to low-income families. While these families face the most pressing challenges, junk fees affect a broad spectrum of households. Many middle-income families, who do not qualify for free or reduced-price meals but still struggle to meet rising living costs, also shoulder the weight of these unnecessary charges.

The USDA’s goal of eventually expanding the ban to all families is admirable, but it leaves a significant portion of families in a financial gray area unaddressed in the interim.

Furthermore, the reliance on cashless payment systems creates structural inequities. Schools increasingly adopting these systems, while convenient, often lack safeguards to ensure affordability for all families.

For instance, families without access to bank accounts or digital payment methods may face barriers in navigating these systems. The USDA should consider alternatives, such as subsidizing processing fees or allowing fee-free cash or check transactions, to ensure inclusivity in school meal payment options.

The policy also highlights broader systemic issues in how school meals are funded and provided. As Agriculture Secretary Tom Vilsack rightly pointed out, the most equitable solution would be providing free, healthy school meals for all children.

Universal free school meals would not only eliminate the need for processing fees but also remove stigma and streamline access for all families, regardless of income.

While the USDA’s policy is a positive step toward equity, its delayed timeline, limited scope, and lack of structural reform fall short of addressing the broader challenges families face.

A more immediate, inclusive, and systemic approach is necessary to ensure that every child can access nutritious meals without financial or logistical barriers.