We have to pay fees like everyone else, does not matter repeat or not, since the school is not a charity.
I think it is unrealistic for your school to operate in this way in the long run, yes, students benefit. But remember, every sensei is here is to earn money to either to support themselves or send back home.
If the school generates less income from students, there will be less to pay senseis, and if you are paid less than your counterparts in other language school, would you be motivated to teach as well as others ? Why would you want to leave the country to get employment overseas if you are able to find work locally [ and for the same salary ] ? Ignore the fact that teachers should teach only if they love teaching, but who will teach if there is not enough income for themselves and their families ? [ a good example will be pre-school teachers' salaries, but this is not the forum to talk about it ]
Even the school has to pay expenses like rental, salaries, electricity, administrative, taxes etc. Where will all that money come from ?
According to this, 3.46 million Japanese are out of work
globalcrisisnews.com/asia/japan-hits-5-per-cent-unemployment-rate/id=936/
Yes, a smaller school needs to do more extras to retain students, but not in this manner that keeps burning a hole in their pocket, when there are many other ways to do so.
It is only fair if you were to buck up and be fair to your classmates, your sensei and your school. I cannot imagine what would happen to the school if at least half the students in a class starts to repeat.
I wish you the best in passing the next review test, and look forward to hearing from you here.