In the digital age, paying bills can be as easy as clicking a button.
But when parents pay schools for their students’ meals and field trips, they often have to shell out for extra fees—as much as 60 cents for every dollar—that go to third-party payment processing companies, a new federal report shows.
Two-thirds of the nation’s 300 largest school districts contract with one of roughly 20 companies that provide an online portal for parents to send funds to their child’s school. The systems are most commonly used for school lunch fees but also provide a platform for parents to pay for field trips, fines, and other school expenses.
But parents who use these platforms to deposit money for their children’s meals every other week—a frequency that school districts said was common—spend as much as $42 more per school year to cover transaction fees, the report from the Consumer Financial Protection Bureau says. For many low-income families—who often are forced to make smaller payments more frequently, and thus encounter transaction fees more frequently—those fees can be an extra burden.
Federal law requires schools to offer fee-free options for meals. But in some cases, those fee-free options—like paying with cash or check—are more difficult than paying the fee online or using an app, or parents don’t know about them.
Companies use these fees to help drive up profits, the report argues. While payment companies spend roughly 1.5 percent of each transaction in order to process it, the biggest companies working with school districts charge families 3.5 to 5 percent of each transaction, according to the report.
The Mansfield district in Texas contracts with PayK12, which provides a platform parents use to pay for field trips, fines, and ticketed events like concerts and athletic games. (The district uses a different platform for meal payments.)
The district does allow parents to pay outside of the platforms with cash, check, credit card, and money order as well, but “more and more” parents are opting to pay using the online platforms, said Chelcie Howley, an accountant for the Mansfield district.
The PayK12 system charges parents 4 percent of each payment as a transaction fee, plus 25 cents.
“It was the lowest rate we could find at the time of searching for a vendor, and it was a vendor that had everything we needed,” Howley said. “It is really the price of doing business digitally these days.”
Some districts cover the transaction fees so parents don’t incur them. But most require parents to pay at least part of them, if not all, the report says.
A few companies dominate the payment processing market for schools
The report from the Consumer Financial Protection Bureau, an independent agency within the Federal Reserve, is part of an ongoing series spotlighting “junk fees” collected by banks and other financial companies, including surprise overdraft fees and unexpected mortgage closing costs.
To better understand school payments, agency staffers conducted interviews with school staff and company officials, and sampled publicly available data from the nation’s 300 largest school districts, which collectively enroll half the nation’s public school students.
Three companies—MySchoolBucks, SchoolCafé, and LINQ Connect—dominate the market for school district payment platforms, according to the agency’s research. Those three alone currently serve two-thirds of the districts sampled in the report.
A spokesperson for LINQ Connect declined to comment. MySchoolBucks, SchoolCafe, and PayK12 didn’t respond to requests for comment in time for publication.
These fees aren’t set in stone. Hawaii’s statewide school district negotiated savings of 67 cents per transaction for parents during contract negotiations with EZSchoolPay in 2018. But school district officials drawing up the contracts often don’t realize that they can negotiate the fees parents will pay for using the platform, the report says.
Sometimes the companies aren’t willing to budge. And in some cases, the payment platform is just one feature of a larger contract with other, more prominent features.
The 35,700-student Mansfield district has to pay the company $25 anytime someone’s credit card payment is declined. The school or department covers that fee, which tends to crop up a handful of times each week, from its own funds.
Howley said the platform is primarily useful for the district finance office because it cuts down on the amount of time money sits in a school building before making its way to the district office.
Parents in the Pittsgrove district in New Jersey, meanwhile, have asked district officials to expand options for electronic payments to include fundraising and sporting events, said Darren Harris, the district’s business administrator and board secretary.
The district is now exploring the possibility of a centralized payment platform that parents can use for all school-related fees.
“As society becomes increasingly paperless, finding no-fee or lower-fee options will be paramount,” Harris said. “Even more important will be the ease of pay for parents and districts.”
Families face a wide range of fines and fees in public education
The practice of charging transaction fees to families is part of a larger scheme of hidden fees and fines that prevent many students from low-income families from accessing the same educational opportunities as their peers, said Paige Joki, a staff attorney at the Education Law Center-Pennsylvania, a nonprofit group that advocates for public school students.
Joki is working on an ongoing project with Thalia González, a professor of education and racial justice at the University of California Law San Francisco, that spotlights longstanding and often-opaque school district and state policies for charging students and their families for necessary products and minor infractions.
Students in Missouri and Pennsylvania, where Joki and González have focused the bulk of their research so far, risk not graduating if they haven’t paid all remaining debts. In the latter state, parents could face jail time for failing to pay mandatory truancy fees.
Policies are rarely uniform from one district to the next. One district charges students $5 if they lose a hall pass. Another bills parents $1 for each minute they’re late picking up students from school, Joki and González found.
Joki and González’s first publication on this subject came from combing through more than 700 school handbooks and categorizing fees and fines into a long list of categories. They’re now working on doing the same for Missouri—and hoping to build a case for a fine-free schools movement.
“Our work is really borne out of necessity,” González said. “We think education needs to be part of the conversation around fines and fees.”
