Sigh, someone doesn't know what demoted means...
A demotion is a compulsory reduction in an employee's rank or job title within the organizational hierarchy of a company, public service department, or other body. A demotion may also lead to the loss of other privileges associated with a more senior rank and/or a reduction in salary or benefits. An employee may be demoted for violating the rules of the organization by a behaviour such as excessive lateness, misconduct, or negligence. In some cases, though, an employee may be demoted as an alternative to being laid off, if the company is facing a financial crisis. A move to a position at the same rank or level elsewhere in the organization is called a lateral move or deployment. A voluntary move to a lower level is also a deployment as it is not a compulsory reduction in level. Demotion is often misinterpreted simply as the opposite of a promotion, however it is only one means of undergoing a reduction in work level.
When I said "demoted" - I don't mean from Slifer, but from Teacher rank.
As for keeping your "dorm", that's just flat out BS. The logic - being in the lowest dorm and having a teacher rank is just dumb, this just shows the flaws in the non-testing system DA uses for dorm upgrades... but that's not my concern. Overall DA wishes to reward the more active people, not the inactive - so it makes "some" sense.