Rebecca Wood, 45, was already dealing with high medical bills in 2020 when she noticed she was being charged a $2.49 "program fee" each time she loaded money onto her daughter's school lunch account. As more schools turn to cashless payment systems, more districts have contracted with processing companies that charge as much as $3.25 or 4% to 5% per transaction, according to a new report from the Consumer Financial Protection Bureau. The report found that though legally schools must offer a fee-free option to pay by cash or check, there's rarely transparency around it, the AP reports.
"It wouldn't have been a big deal if I had hundreds of dollars to dump into her account at the beginning of the year," Wood said. "I didn't. I was paying as I went, which meant I was paying a fee every time. The $2.50 transaction fee was the price of a lunch. So I'd pay for six lunches, but only get five." The US Department of Agriculture, which oversees the federal policy on fee-free school lunch, has mandated that districts inform families of their options since 2017, but even when parents are aware, having to pay by cash or check to avoid fees can be burdensome.
In its review of the 300 largest public school districts in the US, the CFPB found that 87% of sampled districts contract with payment processors. Within those districts, the companies charge an average of $2.37 or 4.4% of the total transaction each time money is added to a child's account. For families with lower incomes who can't afford to load large sums in one go, those fees can hit weekly or even more frequently, increasing costs disproportionately, per the AP. Families qualifying 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.
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Wood researched the fees and learned about the USDA requirement to offer fee-free payment by cash or by check. When she pointed this out to the superintendent of her daughter's Massachusetts school district, the administrator said the lack of transparency was an oversight. She became part of a campaign that successfully pushed for universal free school lunches in the state but continues to protest school processing fees for families. "Even if lunch itself is free, if you want to buy something a la carte, or an extra lunch, or some other transaction, you still have to pay that fee," Wood said. "They take money from people who need it the most."
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