Interesting discussion, and I have been pondering my response all day and where I stand on this. And I say this as a person who previously trained for a number of years, and recently came back to it. So keep in mind as a newcomer, it is possible that there are aspect of TKD I don't fully understand yet. On the other hand, like anyone else, I have observations, and have formed some opinions.
In general, testing is an aspect of both my former style and my current style I don't like because it is a hidden fee. As far as I can tell, other than the value of performing under pressure, testing doesn't add value, from the point of view of the student. It does add a lot of value to the coffers of the dojang.
First, I will say that testing fees were a thing when I did Tang Soo Do 35 years ago and relatively speaking, the testing fees weren't cheap. So, big surprise (not), in TKD, testing fees are again, a thing. Back in my Tang Soo Do days, I assumed the testing fees were a way for local TSD instructors to help out other TSD instructors, since the way it was done back then was, we tested before guest judges, so I figured my testing fees went to pay the judges, and in turn, my master got to collect fees from other schools where he was a guest judge.
In my current TKD school, the tests are done in house by the Master, and other assistant instructors who, presumably do this as part of their jobs. And, colored belt testing is on a regular schedule, held once a month on the last Saturday of the month. So as far as testing fees are concerned, they are just a hidden, or not so hidden fee.
The more I think about it, the more I wonder why the need to do testing at all. When the head instructor thinks a student has demonstrated enough proficiency to advance to the next rank. just award them the next belt.
There is another aspect of testing that bugs me. And perhaps this may be an issue where there is tension between the school and TKD in general. That is, there are clearly parts of the curriculum students are supposed to know for tests that don't get emphasized. Over the last week, I saw several of our provisional black belts literally cramming to figure out the myriad one steps, basic combinations, linear forms, forms (and the minutia of the forms, like how many movements, what does it means, etc) and sparring combos they need to know for their black belt test in just a few weeks.
And here is the thing. I think there is, maybe, too much rote memorization, especially on the one steps, and not enough realistic application that I would hope would really show mastery of these techniques. Put another way, shouldn't the one steps be practiced against an opponent, and not just memorized prior to a test? Same with memorizing facts about a form. If this is important, why aren't students required to recite this stuff every class, when they do the forms?
Now, some have suggested voluntarily skipping chances to test, but at least in TKD, the motivation to test is, they won't teach you everything until you advance to the next belt. It isn't a hard rule with every instructor but with the head instructor and his son, it pretty much is. And at least at my current school, there are advanced classes lower belts can't attend at all, so I can see that as I advance past yellow through green to purple, and eventually brown belt, there are more opportunities to learn new material, and train with more advanced students. So even though I don't like this testing system, it is something I have to do to get better.