School Lunch Junk Fees Hit Working Families’ Wallets

Our public schools, just like our public Postal Service, should operate as a public service, to educate and develop the country's children, and not as another cash cow to enrich Wall Street investors. But, like so many other cherished public institutions, our schools and the families they serve are falling victim to predatory financial practices established to rob the working class of our hard-earned money.

The Consumer Financial Protection Bureau (CFPB) recently released a report that showed alarmingly high fees associated with digital payments for school lunches across the country. As more of the country's school systems have moved to cashless cafeterias, schools are relying on outside vendors to process payments for meals purchased at school. These outside vendors have charged families more than $100 million each year in fees associated with depositing money into student accounts to pay for meals.

The CFPB found that on average the payment processors "charge transaction fees of $2.37 or 4.4 percent of the total transaction" when parents or guardians add money to a student account. The report estimated that a typical family receiving reduced-price lunch and making two deposits per month would pay more than $42.00 in fees during the school year. For every dollar spent on food, payment processors would receive $0.60, an outrageous waste of many working-class families' modest resources. "These fees are widespread, regressive, and may be burdensome for families and districts, who have little control over fee rates and few opportunities to shop around," the report noted.

More than 30 million children receive low-cost or no-cost school lunches each day with federal assistance under the National School Lunch Program (NSLP). The CFPB report underscored that, while the law requires that districts participating in the NSLP provide fee-free options to pay for lunch, these options are often not easily accessible to many families, leading families to pay more than they should just to feed their children at school.

Parents facing these outrageous fees are often powerless to do anything about them. The CFPB report notes that while there are 20 such payment-processing companies active in the country, there are three large companies that dominate the market. School districts have been largely unsuccessful in attempts to negotiate more modest fees, and have found that they save overall by going cashless in their food-service operations.

The CFPB itself does not have the authority to crack down on such abusive fees that companies are imposing on working-class families but is using its investigatory abilities to shed light on this problem affecting millions. What the report underscores however, is that a large network of for-profit companies has increasingly inserted themselves into our public spaces.

Junk fees, like the ones found in our country's school cafeterias, are robbing hard working families of their hard-earned dollars, while enriching shareholders and executives at the large financial service companies that operate these payment processors.

The Campaign for Postal Banking does not only support efforts to expand financial services available at the country's 31,000 post offices, but also works together with our allies in a Grand Alliance to Save Our Public Postal Service to promote the common good. Winning postal banking and other important fidnancial reforms would be a counterweight to the greed of the Wall Street interests that extract their profit from the hard-earned livings of working-class people across the country. ■