When completing the 2017-2018 FAFSA, what does prior-prior year income mean?

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I heard that when I complete the 2017-2018 Free Application for Federal Student Aid (FAFSA), I should provide prior-prior year income. What does this mean?


Prior Prior Year (PPY) refers to the year before the prior tax year. This change for the 2017-2018 academic year will better align financial aid applications with the start of the college admissions season. Students will be able to apply for financial aid before or at the same times as they apply for admission, allowing cost considerations to influence the choice of colleges. Moving to prior-prior year will also eliminate the need for complicated advice about when to file the FAFSA. In past years, students could not file the FAFSA before January 1, but needed to file the FAFSA as soon as possible on or after January 1. Students who file the FAFSA during the first three months of the FAFSA submission season (now October-December) tend to receive more than twice as much grant funding, on average, as students who file the FAFSA later. But, the FAFSA referenced specific lines on the federal income tax return, causing many families to wait until after they file their federal income tax returns to file the FAFSA.

Waiting to file the FAFSA after filing federal income tax returns caused some families to miss state and college deadlines for financial aid. Some states and colleges have very early FAFSA deadlines for their own financial aid funds. For example, two states have February deadlines, nine states have March deadlines and twelve states award their financial aid funds on a first-come, first-served basis until the money runs out. Even some federal student aid programs, such as the Federal Supplemental Educational Opportunity Grant (FSEOG) and Federal Work-Study (FWS), have fixed allocations per college, so the money runs out quickly.

Instead, applicants had to use estimated income and tax information for their initial FAFSA. After filing their federal income tax returns, they then used the IRS Data Retrieval Tool to update the information on the FAFSA.

With the switch to prior-prior-year income and tax data for the 2017-2018 FAFSA, beginning on October 1, 2016, applicants will be able to use the IRS Data Retrieval Tool to prefill the 2015  income and tax questions on the FAFSA, streamlining the application process. This will eliminate the need for later updates to the FAFSA after the applicants and their families file their federal income tax returns. It will also avoid the need for verification of income and tax information. It may encourage students to apply for financial aid earlier, so that students can file the FAFSA before many state and college deadlines.