Prior-Prior Year and Early FAFSA Information

Background:

Prior-Prior Year refers to a change in the required financial data used on the FAFSA beginning in the 2017-2018 academic year.  This change was announced by President Obama on September 14, 2015 in effort to give students and their families more time to make an informed and educated decision about which college or university to attend.  Historically, students have been required to provide the most recent tax information on the FAFSA.  For example, the 2015-16 FAFSA required 2014 tax data, and 2016-17 FAFSA required 2015 tax data.  In the following year, 2017-18, the 2015 tax data will be used again so that the “prior-prior” year’s tax information is required.  This change to requiring prior-prior tax information allows students and their families to complete the FAFSA with final and accurate tax information.  Additionally, because of this change, the Department of Education will release the FAFSA each year as early as October 1st, instead of the previous January 1st availability.

A variety of changes to financial aid are necessary to note so that there will be minimal changes to your financial aid.

Impact – Conflicting Information:

Since the 2016-17 FAFSA and the 2017-18 FAFSA require the same 2015 tax information, it is important that the financial data on both FAFSA’s match.  The federal regulations require the Financial Aid Office to resolve any conflicts in information provided on the FAFSA, documents provided by the family, and any other information provided to other campus offices.  These discrepancies can change a student’s eligibility for federal financial aid and could be adjusted in the middle of the school year because of the data placed on the 2017-18 FAFSA.  For example, the 2016-17 FAFSA reflects an AGI of $60,000 which was manually entered on the FAFSA, but the 2017-18 FAFSA reflects an AGI of $62,137 which was imported to the FAFSA using the IRS Data Retrieval Tool.  There is a mismatch of financial information that must be resolved because the AGI differs from each FAFSA.  An increase to the AGI could affect your financial aid awards (reducing awards or even losing awards altogether) in both 2017-18 and 2016-17, and, this change could occur mid-semester or mid-year.

For this reason, we highly recommend that you ensure your 2016-17 FAFSA information is accurate.  The most efficient way to do this is to use the IRS Data Retrieval Tool through the FAFSA website.  The IRS Data Retrieval Tool links your FAFSA data to the IRS database and populates the data from your federal tax return.  Then, when you are ready to complete the 2017-18 FAFSA, use the IRS Data Retrieval Tool again to ensure the data matches. 

New Students

The impetus to moving to prior-prior year was that students could receive their financial aid awards earlier, giving students and their families more time to compare schools and make an informed and educated decision about which school to attend.  For this reason, new students may want to complete the FAFSA as soon as it is available, October 1st.

Continuing Students

Just like with new students, one of the main benefits to moving to prior-prior year financial data when completing the FAFSA is the federal tax filing deadline has passed making the financial data available when the FAFSA becomes available, October 1st. 

Because a student’s continued eligibility from semester to semester is contingent upon maintaining satisfactory academic progress, returning students will receive their 2017-18 award letters after January 1st.  This will allow time for the fall semester grades to be processed and satisfactory progress to be evaluated.

Summary

The benefits of prior-prior year and the early FAFSA are exceptional.  But with these changes come some risk of lost or reduced aid due to conflicting information.  The Financial Aid Office is required to resolve all discrepancies found between the two FAFSA’s (2016-17 and 2017-18), documents provided by the family and information from other offices.  These potential changes could occur mid-semester or mid-year.  Therefore, in an effort to prevent these changes from happening, we highly recommend using the IRS Data Retrieval Tool for 2016-17 as soon as possible.  Additionally, we recommend using the IRS Data Retrieval Tool when completing the 2017-18 FAFSA as early as October 1, 2016.

Example

The following example is designed to give you a better understanding of how conflicting information could lead to financial aid changes.

Pell Grant and State Grants

Some of the most common mistakes made when manually entering the financial data on the FAFSA include, lower AGI, incorrect taxes paid, omitting untaxed income found on the tax return, and asset information. 

If you entered your AGI on the 2016-17 FAFSA as $62,000, but you indicated on the 2017-18 FAFSA that the AGI was $64,286, the Financial Aid Office would be required to resolve the discrepancies between both FAFSA’s.  It is possible that changing the AGI would change the Expected Family Contribution (EFC) which would change financial awards like, Pell Grant, SEOG, Maryland State Grant, other State Grants, and direct subsidized loans.  These changes can occur in the middle of a semester or middle of the school year. In the example just given, increasing the AGI could increase the EFC by $1000, resulting in a reduction in the Pell Grant award from $3865 to $2865.  Even though you have been relying on these financial awards to cover education expenses for months, we would be required to make the adjustments on your account.  Now you owe an additional $1000. 

To prevent this change from occurring, we highly recommend using the IRS Data Retrieval Tool for 2016-17 or submitting an IRS Tax Transcript for 2015 to the Financial Aid Office as soon as possible.  When completing the 2017-18 FAFSA on or after October 1, 2016, we again highly recommend using the IRS Data Retrieval Tool or submitting the IRS Tax Transcript for 2015.

A change to financial information will impact the EFC and may cause a reduction or loss of awards such as Pell Grant, SEOG, Maryland State Grants, other State Grants, Subsidized Direct Loan and some institutional grants.