In most hierarchical associations, it's only the upper ranks that are divorced from skill testing. In the NGAA, for instance, 1st and 2nd dan ranks are tested. Above that, ranks are for honorary and hierarchical purposes, only (other than the fact that dan ranks can promote to one rank below them).
So, for the student, there's very little functional difference between the NGAA's 6 dan ranks and hierarchy, versus the 3 "ranks" (black belt student, instructor, senior instructor) I use. In both cases, all that matters is the associate instructor level (their 1st dan, my "instructor") and the chief instructor level (their 2nd dan, my "senior instructor"). Beyond that is just for organizational purposes.