Warren, Fetterman, Senators Push USDA to Eliminate School Lunch Junk Fees
July 2024 report by the CFPB found that payment processors are collecting more than $100 million in fees annually from families buying school lunches
Washington, D.C. – U.S. Senators Elizabeth Warren (D-Mass.), John Fetterman (D-Pa.), Chair of the Senate Agriculture, Nutrition and Forestry Subcommittee on Food and Nutrition, Specialty Crops, Organics and Research, Debbie Stabenow (D-Mich.), Chair of the Senate Committee on Agriculture, Nutrition, and Forestry, Bernie Sanders, Chair of the Health, Education, Labor and Pensions Committee, Sherrod Brown (D-Ohio), former chair of the Agriculture Subcommittee on Hunger, Nutrition and Family Farms, Bob Casey (D-Pa.), Raphael Warnock (D-Ga.), and Brian Schatz (D-Hawaii) wrote to the United States Department of Agriculture (USDA) Secretary Tom Vilsack, urging the agency to act quickly to address exorbitant school lunch fees charged by payment processors.
“Every day, greedy payment processing companies are ripping off working families, snatching dollars meant to pay for kids’ school lunches in order to pad their profits,” wrote the senators. “It is unacceptable that parents face exorbitant fees just so their children can eat school lunch.”
A July 2024 report by the Consumer Financial Protection Bureau (CFPB) found that payment processors were collecting more than $100 million in fees annually from families buying school lunches. In most school districts, families must pay a flat fee each time they deposit money into their child’s school lunch account, and as a result, “lower-income families making frequent small payments” shoulder this burden disproportionately.
For years, USDA maintained that students participating in federal nutrition programs “shall not be charged any additional fees;” however, in 2014, USDA created an exemption for online payment processors. Since then, cashless payment methods have become much more common, which has allowed payment processors to funnel ever more money into their own pockets, instead of the school lunch accounts parents are trying to replenish. In fact, CFPB found that, “over the course of a school year, families with children eligible for means-tested reduced price lunch programs may send $0.60 to payment processors for each $1 they spend on school lunch.”
The senators are urging USDA to stand up to greedy payment processors by withdrawing USDA’s 2014 guidance permitting payment processing fees on school lunch purchases and to work with state departments of education to empower individual school districts to secure fair payment processing contracts.
“Together, these steps will lower costs for families who are already facing higher costs at the checkout counter due to corporate price-gouging and ensure that greedy payment processors cannot continue to rip off American families,” concluded the senators.
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