A group of senators has called on U.S. officials to ban transaction fees on school lunch accounts, arguing that companies that process student meal payments unnecessarily raise costs for families.
In a letter sent Wednesday evening to Agriculture Secretary Tom Vilsack, Sen. Elizabeth Warren, D-Mass., and seven other senators called for immediate action from the USDA, which oversees the program that provides billions of meals to students across the nation each year.
While the meals are low-cost – and in some cases free – families often face “exorbitant” fees from private payment processors when they deposit money into their children’s accounts, the letter said.
“Every day, greedy payment processing companies rip off working families and take away our children’s school lunch money to increase their profits,” the letter, first reported by NBC News, said. “It is unacceptable that parents should have to pay exorbitant fees just so their children can eat school lunches. The USDA should ban these deceptive fees.”
The letter, signed by seven Democratic senators and Vermont independent Sen. Bernie Sanders, came two months after the Consumer Financial Protection Bureau, a government agency that tries to ensure market fairness, released a report on school lunch payment processors that found the companies collect more than $100 million a year in transaction fees.
School lunch prices vary across the country, but a survey conducted by the School Nutrition Association, an industry group, found that lunches cost about $2.83 for elementary school students, $3 for middle school students, and $3.05 for high school students. School breakfasts usually range from $1.75 to $1.80.
This price means that $100 million in transaction fees could have purchased approximately 33 million additional school meals, or over 55 million school breakfasts.
“School lunch fees should not exist, and families should not be exploited by online payment processors to squeeze every penny out of their children’s school lunches,” Warren said in a statement to NBC News.
Sen. John Fetterman (D-Pennsylvania), who also signed the letter, called the payment processors’ actions “simply repulsive.”
“These unfair fees are scamming hard-working parents, and it’s time for the USDA to end this extortion practice and stand up for families, not big corporations trying to steal our kids’ lunch money,” he said in a statement to NBC News.
A July report found that payment processing disproportionately burdens low-income families because they tend to make small, frequent deposits to their children’s school lunch accounts, and many payment platforms charge a flat fee for each deposit.
The fees can add up: Families who earn between 130% and 185% of the poverty level and qualify for discounted school lunches could send 60 cents to processors for every dollar they spend on school lunches, or about $42 over the course of a school year, according to the report.
“These fees are usurious practices by payment processors and must be stopped,” said Wednesday’s letter, which was signed by Warren, Sanders and Fetterman as well as Sens. Bob Casey of Pennsylvania, Debbie Stabenow of Michigan, Sherrod Brown of Ohio, Raphael Warnock of Georgia and Brian Schatz of Hawaii.
The USDA tells school districts not to add surcharges to school lunch prices, but since 2014 it has made exceptions for online payment processors, provided that schools offer other fee-free payment methods. But many school districts don’t adequately inform parents about the fee-free alternatives, the letter said.
The senators called on USDA officials to revoke the 2014 exemption. Asked to respond to the letter late Wednesday, a USDA spokesperson told NBC News in an email that “the department is taking additional steps to crack down on unfair fees that are driving up the cost of school lunches for families,” and said the department would provide more details in the coming days. The spokesperson also referred to Vilsack’s comments from July, vowing that “USDA will continue to review its policies and work with schools, state regulators and payment processors to ensure that all families have a clear, readily available, fee-free payment method.”
The petition to ban tuition fees is part of a broader effort by senators to address student food insecurity. Last week, Warren and others introduced bills in both the House and Senate that would expand eligibility for the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps, to college students.
And early Wednesday, Fetterman led a Senate subcommittee hearing on the benefits of providing free school meals to all school children, regardless of their family income, something that has been temporarily implemented nationwide during the pandemic thanks to a COVID-19 federal child nutrition waiver aimed at removing barriers for families in need.
Anti-hunger activists have called for the return of school meals to all, arguing that it would allow more needy children to receive them without the cumbersome paperwork typically required to prove eligibility for free or reduced-price meals and the stigma some students once felt toward free meals. They say the fees would only make things worse.
“We know food insecurity is on the rise,” said Marisa Kirk Epstein, senior director of research and policy for the nonprofit Share our Strength’s No Kid Hungry campaign, citing a recent USDA report. “It’s troubling that families, particularly low-income families who just might qualify for free school lunches, are faced with these additional costs and fees that come out of their own pockets, making it harder for them to feed their children.”
According to the USDA, studies have found that school lunches are often the most nutritious meal of the day for American children. While a handful of states have permanently provided school meals to all students, most have reverted to pre-pandemic formats. Meanwhile, unpaid school lunch debt is swelling.
“School lunches should always be free and should never be criticized,” Fetterman said at Wednesday’s hearing. “Frankly, it shouldn’t even be a conversation topic.”
