WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) has released a report shedding light on the hidden fees that parents face when paying for their children’s school lunches through private payment processing companies. These companies, which service school districts, often charge transaction fees that disproportionately affect low-income families.
CFPB Director Rohit Chopra pointed out the economic burden these fees place on families. “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,” Chopra said. The report aims to help school districts avoid contracts with financial firms that impose excessive fees on families.
Agriculture Secretary Tom Vilsack emphasized the importance of accessible school meals. “USDA and schools across America share the common goal of nourishing the 30 million children that depend on school meals as a vital source of nutrition,” Vilsack stated. He assured that the USDA will review policies and collaborate with schools to ensure fee-free payment methods are available to all families.
Education Secretary Miguel Cardona highlighted the broader impact on students. “Students do best in school when they have access to nutritious school meals,” Cardona noted. He stressed the need to create payment systems that are affordable and accessible for all families.
The CFPB report highlights several key issues:
- Lack of Choice for Parents: Families cannot choose their payment platform because contracts are made at the school-district level. This lack of choice makes it difficult for families to avoid harmful practices.
- Fee-Free Options Not Accessible: Often, schools and processors do not clearly advertise fee-free payment options. When available, fee-free methods can be more burdensome than electronic options.
- Disproportionate Impact on Low-Income Families: Flat transaction fees mean that low-income families, who make frequent small payments, end up paying more than wealthier families who can afford to load larger amounts into lunch accounts at once.
- Limited Competition: Complex contracts and company structures protect payment processors from competition, making it harder for school districts to negotiate better terms.
The report found that more than 20 companies offer these services, but three dominate the market. On average, these processors charge $2.37, or 4.4% of the total transaction, each time money is added to a student’s lunch account. Collectively, these fees cost families over $100 million annually.
School food authorities participating in the National School Lunch Program must provide fee-free payment options, but these are not always well advertised or accessible. As a result, families often end up paying more in fees than necessary.
The CFPB’s findings emphasize the need for better oversight and transparency in school lunch payment systems to protect families from unnecessary financial burdens.
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