In my club one of my kohai has a problem with ukemi. My kohai fears injury from tobi ukemi and indeed will not take them. I have tried many things from simply increasing the difficulty of the ukemi until it is tobi to a ten step ukemi programme, from a wonderful article in the asian martial arts journal my a Mr Wolfe, everything has failed. The sitaution has gotten so bad that the student stepped of the mat during summer, pretending to be injured, so as not to be hurt. And indeed is often hurt due to disengaging to early from a technique. Please be aware before a host of "time is the answer" replies land on the forum my kohai is first kyu and will be taking the aikikai grade next summer, probably with a stranger unaware of the ukemi problem. It pains me that this students is very upset because of this situation.
I won't pretend to be anything approaching an expert in Aikido - but two things strike me here. One is that your student shouldn't be going into a grading, of any sort, if their ukemi are poor (for whatever reason, mental or physical). It's such an important part of Aikido that it should to be ranked as equally important as the techniques..
The second thing is that I think it's probably counter productive to allow your student to 'step off' without a valid reason, from both an attitude point of view, and of lost training time..
From my limited experience I can only suggest three possible solutions, possibly working together. The first, if the student's ukemi is good, is to not allow them to withdraw from the technique - in the sense of applying it strongly enough that they are forced to take instinctive ukemi. This should convince them that they can do it, though of course this only works if their ukemi IS good enough for this..(I'd argue that if they're Ikkyu it should be..)
The second thing, depending on the personality of the student, is to come right out and tell them they won't be taking their shodan. Depending on the person involved, this might remove some of the pressure from their practice..
Lastly, it could be worthwhile to sit down with the student, and try and work through the fear issue - find out where it stems from. Maybe even some form of counselling - may seem extreme, but if their fear is so very strong it might be impacting other areas of their life as well..?
I wish you and your student the best of luck in dealing with this issue.