When it comes to school meals, every student deserves equal access—and no student should face added financial barriers just to eat. That’s the spirit behind the USDA’s new fee policy, and it’s time to start preparing now.
Announced in November 2024, USDA Memo SP 04-2025 outlines a key update: starting in the 2027–28 school year, schools cannot charge credit card or digital transaction fees to students who qualify for free or reduced-price meals. While the goal is to remove obstacles for families, the regulation introduces new operational and compliance challenges for districts.
To help school leaders get ahead of the change, LINQ hosted a webinar exploring the new USDA fee policy’s implications, along with actionable steps for readiness. Below, we’ve pulled together key takeaways from that conversation, including expert insights from LINQ CEO Brian Jones, President of State and District Nutrition Mike Borges, and General Manager of Payments Keith Womack.
What the USDA’s New Rule Says
At its core, the USDA’s updated guidance prohibits schools from passing along any digital payment processing fees to families receiving free or reduced-price meal benefits. While schools can still charge these fees to full-pay students and for à la carte items, any online payment tied to reimbursable meals for eligible students must be fee-free.
The regulation also reinforces strict data privacy standards under the National School Lunch Act, prohibiting the disclosure of eligibility status to third parties like payment processors without proper authorization.
In short:
- Starting SY 2027–28, no convenience or processing fees for free- and reduced-eligible students
- Schools may still charge for full-pay and à la carte transactions
- Free/reduced status data must stay confidential within the nutrition program
“No Easy Button” — Why This Matters to Districts
“This is a big shift, and there’s no easy answer,” said Borges, speaking to a common concern among districts. The policy has surfaced difficult questions about how to absorb processing fees, adapt systems, and ensure compliance, all at a time when budgets are already strained by rising food costs and staffing shortages.
“Credit card fees don’t just disappear,” added Womack. “They’re real costs, typically 3.5–5% of every transaction. Schools can’t simply pass them to someone else.”
Districts now face two basic options for accepting digital payments:
- Fund the fees internally (adding to budget strain)
- Adopt a compliant payment system that differentiates eligibility status automatically
Either of these options requires careful consideration. But as Jones emphasized, “Our job is to help districts thread the needle — keeping kids fed, systems compliant, and families supported without adding barriers or spotlighting need.”
The Stigma Factor: Why Seamless Systems Matter
While the regulation is focused on cost, its equity implications go far deeper. “We can’t let a payment policy inadvertently single out students who already face economic challenges,” said Jones.
That’s why LINQ prioritizes a confidentiality-first system design. It makes sure that eligibility status isn’t revealed during payment, and that families aren’t asked to jump through extra hoops to participate.
With LINQ’s integrated nutrition and payment platform, only the parent knows the student’s eligibility. Fees are removed behind the scenes, and no messages or workflows draw attention to a student’s status. That’s critical in reducing stigma and preserving dignity.
A Compliance Clock Is Ticking — But Support Is Here
Though the rule doesn’t go into effect until the 2027–28 school year, districts should begin planning now. That’s why LINQ is releasing a product update in July 2025 that will make compliance easier for those using LINQ Connect to accept meal payments. That’s two full years early, giving our district partners time to:
- Enable fee differentiation by student eligibility
- Estimate budget impact with historical payment data
- Update internal policies and workflows to ensure compliance
In addition, LINQ will provide communication templates to help districts educate families without raising concern or violating privacy.
“Our commitment is to walk alongside districts every step of the way,” said Womack. “We’ve already built the tools. Now we’re building the roadmap.”
What Districts Can Do Now
- Audit your systems. Can your payment solution differentiate student statuses while keeping data private?
- Estimate financial exposure. LINQ’s customer success teams can help run historical reports to project potential fee coverage costs.
- Review data-sharing practices. Ensure no third-party vendors are accessing FRL eligibility data outside the NSLA’s scope.
- Start the conversation. Loop in your finance and IT teams to plan for budgeting and technology updates.
And above all, don’t wait. “Districts who start planning now will be in a much better position,” said Borges. “This isn’t just about checking a compliance box. It’s about protecting your program and your students.”
Looking Ahead: Equity, Efficiency, and Empowerment
School meals do more than fill plates. They fuel learning, community, and opportunity. This policy change is a reminder that equity is about what we serve and how we serve it.
At LINQ, we believe every student should be able to eat without barriers, and every district should have the tools to make that possible without jumping through unnecessary hoops.
If you’d like to receive a personalized readiness assessment or request the full USDA Fee Policy White Paper, reach out to our team today. We’re here to help you plan confidently and serve every student with dignity.
Assess your district’s readiness with LINQ
Connect with us to walk through a readiness assessment with a LINQ expert on coming USDA rule changes. We’ll look at your unique situation and provide actionable tips for smooth transition and worry-free compliance.