The U.S. Department of Agriculture (USDA) has announced a new policy to eliminate transaction fees for students who are eligible for free or reduced-price school meals. Starting in the 2027-2028 school year, families benefiting from these programs will no longer pay extra charges when using cashless payment systems for meals. This policy aims to ease the financial strain on households with incomes up to 185% of the federal poverty level, which includes families earning up to $57,720 for a family of four. Currently, families face transaction fees ranging from $3.25 to 5%, which make meal payments more expensive than the federally subsidized rates of 30 cents for breakfast and 40 cents for lunch.

This new policy seeks to address monopolistic practices in the payment processing industry, where companies such as MySchoolBucks, SchoolCafe, and LINQ Connect control most of the market. According to the USDA, 87% of major school districts have contracts with these companies, leading to an average fee of $2.37 per transaction. The USDA also aims to empower school districts to negotiate better terms or adopt systems that do not charge fees. Agriculture Secretary Tom Vilsack emphasized that this policy is a significant step towards achieving financial equity and ensuring that low-income students can access nutritious meals without additional financial barriers.