Grade level for FAFSA?

DD19 completed her freshman year at Penn State.

Then she transferred to a different school, as PS would not let her into their program. It is a 2 year program.

So she is in her first full year at the new school, but second full year of college. She will graduate with an Assoc degree in 3 full years of college.

The FAFSA asks what would be her grade level? Do I put second year/sophomore or third year/junior?

See https://fafsa.ed.gov/fotw1415/help/fotw16b.htm

Yes, I read that, but to me that indicates someone not going full time, so it would take years to complete their degree.
So grade level would be year’s worth of credits. She will have the full year, and if going for a BS would be in her junior year.

I was looking at the federal loans.

Freshman $5,500 (max $3,500 subsidized)
Sophomore $6,500 (max $4,500 subsidized)
Juniors, Seniors and Beyond $7,500 (max $5,500 subsidized)

A $1000 in subsidized loans over unsubsidized is a big deal, as she has to take the full amount.