Prior Prior Year

The tax year used on the FAFSA is changing as is the time when the FAFSA will be available for completion.

Applying for aid for 2017-18 will mark significant changes for the FAFSA. Be sure you understand how the changes affect you – particularly if you are a returning student.

Tax Year for the FAFSA

Beginning with the 2017-18 cycle, the FAFSA will collect income information from the tax year one year earlier than has been used in the past. So for the 2017-18 FAFSA, students and families will provide income information from the 2015 tax year rather than the 2016 tax year.

The FAFSA will no longer ask you to report prior year income. Instead, you will be using prior prior year information sometimes referred to as PPY.

Using an earlier tax year for determining eligibility for financial aid will make it significantly simpler for families to complete their FAFSA, because they will be using information from tax records that had been completed many months earlier.

Moreover, most aid applicants and their parents, when required, will be able to use the FAFSA/IRS Data Retrieval Tool (DRT) to automatically view and transfer required tax return information directly from the IRS onto their FAFSA. Using the DRT not only increases the accuracy of information used to determine aid eligibility but also eliminates the burden for many students and parents of providing tax return transcripts for verification of the FAFSA income information.

To protect sensitive taxpayer data, the IRS and Federal Student Aid announced in March 2017 the IRS Data Retrieval Tool on fafsa.gov and StudentLoans.gov will be unavailable until extra security protections can be added. While they are working to resolve these issues as quickly as possible, students and families should plan for the tool to be offline until the start of the next FAFSA season (i.e., October 2017).

Until further notice, families, who have not already used the Data Retrieval Tool on this FAFSA, will need to report tax information from their own copies of tax documents when completing or updating a FAFSA and will need to request tax transcripts from IRS or supply signed copies of the appropriate tax forms if they are selected for verification.

Reapplication Still Necessary

The 2017-18 FAFSA will be a one-time overlap year in taxes used. Applicants submitting a 2016-17 FAFSA and then a 2017-18 FAFSA will be using 2015 tax information on both applications. Even with this similarity, it is necessary to re-apply for 2017-18 if you are seeking financial aid for that year.

While tax information requested repeats this one year, there are other data items on the FAFSA that are also used to calculate aid eligibility. Items such as household size, number in college, and assets could be very different from one year to the next. And even without any changes, UC needs to know your continued desire to seek financial aid.

So while it may seem confusing to use the same tax year this one time two years in a row, the appropriate FAFSA is necessary to receive aid for each aid year.

Significant Changes in Income

Through 2016-17, the FAFSA has asked families to report their income information by reporting the prior year's tax information. Because family income does not change that drastically from year-to-year, the previous year income gave good insight into family finances for the academic year.

Studies completed by the U.S. Department of Education found that family finances remained similarly comparable when going back two years. Not only was anticipated income for the aid year in line with the prior year, it often lined up with the prior-prior year.

At the same time, some family income information does change negatively and significantly. Students (and parents) who have substantially lower income levels for the academic year or who experience excessive out-of-pocket medical expenses not reimbursed or covered by insurance can complete the special circumstances form for the appropriate academic aid year found on our Forms & Publications page.

Financial aid staff can then assess how these changes may affect your eligibility for aid programs. Note that changes, even significant ones, may change your Estimated Family Contribution (EFC) as determined by the FAFSA but may not change your aid eligibility due to individual aid program criteria.

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The 2017-18 FAFSA also will begin a new timeframe when the FAFSA will be available.

With tax information already completed with the IRS for the prior-prior year, the 2017-18 FAFSA (and those for future years) will be made available online beginning October 1 of each year for completion and submission for the upcoming academic year.

Because some aid programs are awarded on a first-come, first-serve basis, apply as soon after October 1 of each year as possible. Complete the FAFSA by December 1 for priority consideration for limited funding sources. 

While it may be confusing to be applying for aid soon after the start of one academic year to get funding for the next academic year, the timing of completing your FAFSA remains key for aid awarding and financial planning.