USDA ban on school lunch fees for low-income families begins in 2027

The U.S. Department of Agriculture announced that students eligible for free or reduced-price school meals cannot be charged processing fees, also known as junk fees, beginning in 2027.

School districts currently work with processing companies to offer cashless payment systems for families. But the companies can charge "processing fees" for each transaction. By law, students who are eligible for reduced price meals cannot be charged more than 30 cents for breakfast and 40 cents for lunch. With processing fees, however, families can end up paying 10 times that amount. Processing companies charge as much as $3.25 or 4% to 5% per transaction, according to a recent report from the Consumer Financial Protection Bureau.

For families with lower incomes who can't afford to load large sums in one go, processing fees can arrive weekly or even more frequently, increasing costs disproportionately. Families that qualify for free or reduced lunch pay as much as 60 cents per dollar in fees when paying for school lunches electronically, according to the report.