How Far Back Does FAFSA Look for Financial Aid?
Understand how FAFSA uses past financial data to determine your student aid eligibility and what to do if your situation has changed.
The Free Application for Federal Student Aid (FAFSA) serves as a gateway for students seeking financial assistance for higher education. This application is a necessary step for accessing various forms of federal, state, and institutional aid. Its fundamental purpose is to assess a student’s financial capacity to contribute towards educational costs, helping determine eligibility for grants, loans, and work-study programs.
The FAFSA Look-Back Period
The FAFSA determines eligibility for financial aid by examining financial data from a period known as the “prior-prior year” (PPY). This means that for a given academic year, the FAFSA uses tax information from two years prior to the start of that academic year. For instance, for students applying for aid for the 2024-2025 academic year, the FAFSA requires financial information from the 2022 tax year. Similarly, for the 2025-2026 FAFSA, 2023 tax information will be used, and for the 2026-2027 FAFSA, 2024 tax information will be required.
This approach aims to simplify the application process for families. Historically, the FAFSA used “prior year” data, which often meant applicants had to estimate their income because tax returns for the most recent year might not have been filed yet. The shift to PPY data, implemented starting with the 2017-2018 school year, allows families to use already completed tax returns, making the application more accurate and enabling earlier submission. This earlier availability of financial aid information helps students and families make informed decisions about college affordability sooner.
Information Collected from the Prior-Prior Year
The FAFSA requires specific financial details from the prior-prior year to determine aid eligibility. Applicants typically provide their adjusted gross income (AGI), which is a key component derived directly from their federal income tax returns. The amount of federal income tax paid for the PPY is also collected. Beyond taxed income, the FAFSA also considers certain types of untaxed income.
This untaxed income can include child support received, tax-exempt interest income, and the untaxed portions of IRA distributions. In addition to income, asset information as of the date of application submission is gathered. These assets generally include cash, balances in savings and checking accounts, and the net worth of investments such as stocks, bonds, and mutual funds. Real estate equity is also considered, but typically only for properties other than the family’s primary residence.
How Prior-Prior Year Data Affects Aid Eligibility
The financial data collected from the prior-prior year directly influences a student’s eligibility for financial aid through the calculation of the Student Aid Index (SAI). The SAI, which replaced the Expected Family Contribution (EFC) beginning with the 2024-2025 school year, is an index number that colleges use to determine a student’s need for financial assistance. A lower SAI generally indicates a greater financial need, potentially leading to more financial aid.
The SAI is calculated using a formula that considers the parents’ financial contribution, the student’s income contribution, and the student’s asset contribution. This calculated SAI is then subtracted from the college’s Cost of Attendance (COA) to determine the student’s financial need. The COA encompasses tuition, fees, housing, books, and other expenses associated with attending a specific institution. Financial aid offices at individual colleges use this determined financial need to construct an aid package, which may include federal grants, loans, and work-study opportunities.
Addressing Changes in Financial Circumstances
A family’s financial situation can sometimes change significantly after the prior-prior year data has been reported on the FAFSA. Events such as job loss, a substantial reduction in income, divorce or separation, or significant unreimbursed medical or dental expenses can drastically alter a family’s ability to pay for college. If these changes are not reflected in the PPY data, the FAFSA may not accurately represent the family’s current financial reality.
In such instances, families can contact the financial aid office at their chosen college or university to discuss a “professional judgment” review. This process allows financial aid administrators to use their discretion, on a case-by-case basis, to adjust the data elements on the FAFSA or the Cost of Attendance to better reflect a student’s or family’s current financial standing. Students will typically need to provide thorough documentation to support their claim of changed circumstances for this review.