Dyslexia is another term for a reading disability. It is usually due to problems with either the auditory side of reading (called phonological processing) or the visual side of reading (called orthographic processing) or both. For example, the word "cat" has three sounds /k/ /a/ /t/ - you need to be able to hear and discriminate all those sounds to link them up to letters and learn "phonics" and sound out words. Then, you need to be able to remember spelling patterns of irregular words. Reading and spelling are opposite processes of each other and so are often equally affected. Dysgraphia is the term for a writing disability. This is usually a combination of problems with handwriting/motor coordination as well as problems with staying on the lines, letter formation, bunching letters and words together, punctuation, grammar, and organizing writing.
You should know that it is not entirely true that the school does not test for dyslexia - the school tests children to determine if they need special education - this is usually a combination of special accommodations at school like extra time on tests and preferential seating and special instruction with a special education teacher either in the regular classroom or being pulled out for a certain amount of time per day. If your child is having trouble staying on grade level, they will have a meeting with the pre-referral team (usually called SST or SAP) to determine what they can do to help him in the regular classroom before resorting to testing. If the strategies that team puts into place aren't working, they might go to testing. You can speed up the process by writing a letter to the principal requesting psychoeducational testing for the purpose of determining special education eligibility. If you do that, the school will have 90 days to do the testing. They will not necessarily tell you "he has dyslexia" but they'll tell you whether he qualifies for a learning disability and for special education in the schools.
Kids with dyslexia need very specialized tutoring using "multisensory and direct instruction in phonics" as well as specific instruction for learning sight words, increasing fluency, improving reading comprehension, and improving spelling. Keep in mind that while reversals of letters or numbers is common for kids with dyslexia, it is also developmentally normal until about the age of 8 or the third grade. If it's still happening often then, or if your child is mirror writing before then(writing everything backward) then you should be more concerned.
I have some referrals for private testing if you're interested, but for a good private evaluation it usually does cost between one and two thousand. $600 would be extremely cheap, and I'd question what kind of information you'd really be getting from that. Some insurance companies will cover some portion of psychoeducational testing if there is a question about a psychological disorder like ADD/ADHD or anxiety or something like that. Other companies have special programs or health savings accounts you can use. But keep in mind, if you do a private evaluation, you are most likely going to have to get some private tutoring after that if he does have dyslexia.I have some great referrals for tutors. The schools will most likely only provide the specialized instruction if your son is not on grade level.
If you are in NC - check this out:
Check out this website which will tell you more about your rights in a public school if your child has a disability: http://www.wrightslaw.com
Also look at this site -http://www.dpi.state.nc.us/ec/ and click on "Procedural Safeguards - Handbook on Parents Rights" which tells you more about the process for evaluation through the schools.