What you're missing is that for the school I'm talking about, the stripe test was an official test. Tests were every month or two (this was like 20 years ago, so bear with me on my memory a bit), and it wasn't done "in-class".
Stripe tests like you say, which are basically an in-class assessment of a portion of the curriculum, shouldn't be charged, or maybe $5 or $10 for the dedicated instructor time to evaluate. They shouldn't be $50-75 like a full test. These tests make it feel like a sub-grade instead of a grade.
However, if getting a stripe is basically the same as a new belt - in that it comes with new requirements, increased responsibility, and it's a very similar testing process, then it can be considered a separate grade. If your school is going to have more grades, then stripes make more sense than doing different colors. For example, with 28 belts, would it be:
- White
- Yellow
- Purple
- Orange
- Green
- Blue
- Red
- Brown
- Pink
- Mustard Yellow
- Periwinkle
- Red-Orange
- Sea Green
- Royal Blue
- Burghundy
- Tan
- Hot Pink
You get the idea. There's white and black, the primary and secondary colors, and brown. Anything after that and you need to start using shades. Or use pink, but then risk a significant number of boys leaving the gym because "I don't want a pink belt".