If a student is applying to college and requesting student aid, but has a substantial amount of money in a UTMA account, can that negatively affect their chances to receive financial aid? If so, is there anything that can be done to eliminate this negative effect, such as keeping the UTMA a custodial account until after graduation, or converting it to a retirement account?
Yes, it's considered the students asset, regardless of the custodian aspect.
I don't know how you'd propose to put it in a retirement account, even with the earned income to facilitate this, the limit is $5500/yr.
The larger issue is parental income. That and parental assets. Tough to game that part of the system to get aid. In the end, one should look to scholarships, both merit and non merit based to maximize college support.