Consumer Bureau Takes on School Lunch Fees

Report highlights high fees charged by payment processors

A new report from the Consumer Financial Protection Bureau (CFPB) highlights the harm caused to families by electronic payment processors used to manage school lunch fees.

The federal regulator notes that school systems often use outside vendors to manage payment plans for school meals. In some cases, the vendors charge high fees for the service and families do not typically have a range of options to choose from.

“Transaction fees and other types of junk fees can take an economic toll on American families just trying to pay for basic school expenses, including school lunch for kids,” said CFPB Director Rohit Chopra. “Today’s report will help school districts avoid contracts with financial firms that harvest excessive fees from families who purchase school lunch.”

While more than 20 unique companies offer these services to school districts nationwide, the vast majority of enrolled students are served by just three market leaders. These processors typically charge fees to add money to a student’s school lunch account, which collectively can cost families upwards of $100 million each year.

The CFPB report notes that the fees charged by the leading processors can add up to 4.4% to the total cost of school meals. The report adds that these fees hit low income families the hardest.

Commenting on the report, the United States Department of Agriculture (which administers school lunch dollars to districts) said it will work to provide fee-free options to families.

Agriculture Secretary Tom Vilsack said, "USDA will review its policies and work with schools, state oversight agencies and the payment processors to ensure that all families have a clear and readily-available fee-free payment method."

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