That's possible. I can even think of one parent who suggested that as the reason their child wasn't being promoted. My reply was that although the Y charges $40/month for the program, my annual salary is exactly $0.00, as is that of our Chief Instructor. We do charge a testing fee, so if we were trying to 'soak' someone, we'd be pushing them to test and letting them fail. Except that we use the funds from testing to pay for the belts we give out, and to offset the cost of things like mats, kicking targets, etc.
I think you're more likely to hear something like that at a commercial school.