<p>The transfer itself isn’t a taxable event, but liquidating stock in the UGMA might involve realizing capital gains which might be taxable. That will increase the student’s AGI, which is reported on FAFSA (after a $5K allowance).</p>
<p>It’s a good idea to do the what-if calculations ahead of time using the latest FAFSA spreadsheet (I don’t have the link handy but it’s been linked here many times).</p>