If you’ve been keeping up on the latest financial aid news, you’ve probably heard about the federal government’s shift to collecting what is awkwardly referred to as prior-prior year data on the FAFSA.
In light of this news, it is appropriate to take one step back and discuss a concept critical to understanding the financial aid application process, and that notion is the base year.
Colleges calculate a family’s ability to pay for college each year based, to a large extent, upon their income. In order to approximate a family’s income for the next academic year (which is unknown at the time of application), the FAFSA asks the family to report a prior year’s income: this is known as the base year income. It is the yearly income upon which the financial aid award is based.