USDA bans school lunch fees for low-income families

The USDA announced that beginning in 2027, students eligible for free or reduced-price meals will no longer face processing fees when loading money onto school meal accounts. For low-income families, this change eliminates the “junk fees” charged by payment processing companies—fees that, according to a recent Consumer Financial Protection Bureau (CPFB) report, cost up to 60 cents per dollar on every transaction.

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This also means schools in the Community Eligibility Program whose 40% of students are eligible for free or reduced price meals can no longer charge the fee.

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For years, parents have been burdened by these fees, which schools often pass on through partnerships with payment processors for student meal accounts. In their study, the CPFB found that 87% of the 300 largest U.S. public school districts use these services, forcing hundreds of thousands of parents to pay the fee for convenience.

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How processing fees burden families

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On average, families pay $2.37 or 4.4% of each deposit—nearly equal to the cost of one meal. For low-income families who can’t afford large deposits, these fees add up quickly as they make smaller, frequent payments.

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Rebecca Wood, a single mother to two school-age children, explained her struggle: “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,” she 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.”

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Federal law mandates that students eligible for reduced-price meals pay no more than 30 cents for breakfast and 40 cents for lunch. However, with processing fees reaching as much as $3.25 or 4-5% per transaction, many families end up paying up to ten times the legal limit.

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Where did this decision come from?

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USDA’s decision followed the CFPB report, which showed that processing fees collectively cost families over $100 million annually. While schools also offer cash or check payment options that don’t charge fees, many find mobile payment more convenient, despite the high costs.

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Payment companies claim that schools can negotiate terms before signing contracts. However, complex company structures often make it difficult for schools to secure better rates. With just three big companies controlling most of this market—MySchoolBucks, SchoolCafe, and LINQ Connect, school districts have limited options, leaving families with fewer ways to avoid unfair fees.

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The USDA’s new policy aims to address this issue, relieving families from the burden of unnecessary fees. Although the USDA’s new policy won’t take effect until the 2027–2028 school year, the agency urges schools to reduce fees sooner to uphold federal protection for low-income families.

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Cutting costs for student nourishment: The road to universal free meals

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“USDA and schools across America share the common goal of nourishing schoolchildren and giving them the fuel they need to learn, grow, and thrive,” says Agriculture Secretary Tom Vilsack in announcing the agency’s new policy. Aside from providing children the nutrition they need, this change aims to protect families from excess costs, aligned with broader goals for accessible school meals.

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It’s progress towards universal meals for all. As Vilsack said, “While today’s action to eliminate extra fees for lower-income households is a major step in the right direction, the most equitable path forward is to offer every child access to healthy school meals at no cost. We will continue to work with the Congress to move toward that goal so all kids have the nutrition they need to reach their full potential.”

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Ordo partners with schools to provide healthy school lunches

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With the USDA’s latest policy, schools can focus more on what truly matters—providing healthy meals that fuel students’ learning and growth. Removing these fees helps level the playing field, but schools also need dependable food service partners to consistently meet their students’ nutritional needs.

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Ordo supports schools by providing delicious, nutritious meals tailored to students’ needs. Working with districts nationwide, we ensure students enjoy fresh, balanced meals and schools follow USDA nutritional guidelines without unnecessary costs. As schools strive to make healthy food accessible for all, Ordo is proud to help them serve meals students love and families trust.

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Ordo has become America's fastest-growing school food program, providing fresh meals made from scratch every day in our kitchens. Our chefs focus on cooking homestyle food that’s both nutritious and what students love. Healthy meals result in better student outcomes, and administrators who invest in their nutrition programs invest in their schools.

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Students and parents can place their orders through their ordering app and choose from seasonal menus with 4 to 6 different options daily, like Tex Mex Crunch Salad with Creamy Lime Dressing or Chicken Bacon Wrap with Pretzels, Carrots & Ranch.

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Our online platform automates compliance paperwork for reimbursable meals, tracks important metrics like daily participation rate, and handles all payment and order processing. Ordo offers both vended meal service where we deliver the food every day and onsite food service management with our chefs preparing food on campus. We have served all types of schools, from preschools and daycare centers to private and public schools. We’ve worked with some of the top brands in early education and child care, including Guidepost Montessori, Bright Horizons, Primrose, and more.

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If you’re interested in providing fresh, healthy food for your school, you can reach out to the school partnerships team here.