My kids, both now in hs, took the SAT in 7th grade at age 12. We told them it was to qualify for online classes at CTD (Northwestern Univ.). They didn't complain about the difficulty (both had pretty decent scores based on 12th grade norms), and really had no reference point to know if their scores were high or not. So no, it was not demoralizing. The worst part was that the test takes ~4 hours - long and tedious.