Can an UTMA/UGMA account reduce my child's financial aid for college?
It can, but in the same way that any other asset held by your child can. An UTMA/UGMA account is a custodial account established at a financial institution for a minor child and managed by a parent or other designated adult custodian.
Because the account is held in your child's name, it is considered your child's asset. The federal government's financial aid formula treats your child's assets differently than your assets. Under the current federal formula, children must contribute 20% of their assets to college costs each year before becoming eligible for financial aid, while parents must contribute only 5.6% of their assets.