Corrected: A previous version of this article incorrectly described an aspect of the Mansfield school district鈥檚 arrangement with the PayK12 payment platform regarding fees for declined credit card payments. The company does not charge a fee for declined payments. The article has also been updated to note that PayK12 was not mentioned in the Consumer Financial Protection Bureau report.
In the digital age, paying bills can be as easy as clicking a button.
But when parents pay schools for their students鈥� meals and field trips, they often have to shell out for extra fees鈥攁s much as 60 cents for every dollar鈥攖hat go to third-party payment processing companies, a .
Two-thirds of the nation鈥檚 300 largest school districts contract with one of roughly 20 companies that provide an online portal for parents to send funds to their child鈥檚 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鈥檚 meals every other week鈥攁 frequency that school districts said was common鈥攕pend 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鈥攚ho often are forced to make smaller payments more frequently, and thus encounter transaction fees more frequently鈥攖hose 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鈥攍ike paying with cash or check鈥攁re more difficult than paying the fee online or using an app, or parents don鈥檛 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. PayK12 was not among the companies cited in the Consumer Financial Protection Bureau report, and the Mansfield 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 鈥渕ore and more鈥� 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.
鈥淚t 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,鈥� Howley said. 鈥淚t is really the price of doing business digitally these days.鈥�
Some districts cover the transaction fees so parents don鈥檛 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 collected by banks and other financial companies, including and .
To better understand school payments, agency staffers conducted interviews with school staff and company officials, and sampled publicly available data from the nation鈥檚 300 largest school districts, which collectively enroll half the nation鈥檚 public school students.
Three companies鈥擬ySchoolBucks, SchoolCaf茅, and LINQ Connect鈥攄ominate the market for school district payment platforms, according to the agency鈥檚 research. Those three alone currently serve two-thirds of the districts sampled in the report.
A spokesperson for LINQ Connect declined to comment. MySchoolBucks and SchoolCafe didn鈥檛 respond to requests for comment in time for publication.
These fees aren鈥檛 set in stone. Hawaii鈥檚 statewide school district for parents during contract negotiations with EZSchoolPay in 2018. But school district officials drawing up the contracts often don鈥檛 realize that they can negotiate the fees parents will pay for using the platform, the report says.
Sometimes the companies aren鈥檛 willing to budge. And in some cases, the payment platform is just one feature of a larger contract with other, more prominent features.
Despite the fees, some districts find these platforms are increasingly popular among parents. Howley, from the Mansfield district in Texas, 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鈥檚 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.
鈥淎s society becomes increasingly paperless, finding no-fee or lower-fee options will be paramount,鈥� Harris said. 鈥淓ven more important will be the ease of pay for parents and districts.鈥�
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 Gonz谩lez, a professor of education and racial justice at the University of California Law San Francisco, that for charging students and their families for necessary products and minor infractions.
Students in Missouri and Pennsylvania, where Joki and Gonz谩lez have focused the bulk of their research so far, risk not graduating if they haven鈥檛 paid all remaining debts. In the latter state, parents for failing to pay 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鈥檙e late picking up students from school, Joki and Gonz谩lez found.
Joki and Gonz谩lez鈥檚 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鈥檙e now working on doing the same for Missouri鈥攁nd hoping to build a case for a fine-free schools movement.
鈥淥ur work is really borne out of necessity,鈥� Gonz谩lez said. 鈥淲e think education needs to be part of the conversation around fines and fees.鈥�
