I apologize for butchering the romanized Japanese here:
At the end of our classes, we bow out like Goldsbury Sensei mentioned. Then we shiko dachi down the line of students, each senior student facing and thanking the junior and both bow, saying, "Domo arigato. Gozaya machita." Which means something like, "Thank you for what I have just received."
Something about that rings a bell as well - though we dont do the custom that you described. Perhaps I have heard one of the senior students say it before switching partners, or rather after training with a partner. (In fact Im almost sure of this...one guy in particular I believe says this after each person he trains with.)
Thanks, this really helps, I appreciate it.
When a senior student says this to you after training is there a particular response?
The lower students typically bow...some say "thank you", in Hungarian, - yet in my 5th kyu test we are to learn thank you in Japanese. - So Im assuming I would say arigato gozaj masz...that should be thank you if I got it right. - peace