Immigration New Zealand (INZ) is under fire from students and education providers who say they are paying a heavy cost for a poor planning of its restructure and forecast visa numbers.
Immigration Minister Iain Lees-Galloway said delays in visa processing were the number one thing people contacted him about.
The international education industry said missed enrolments were causing multi-million dollar losses and damaging New Zealand's reputation.
More than 7500 student visa applications are yet to be processed and of those, about 1500 students have been waiting since February or before.
One master's degree student received his visa yesterday, having applied mid-December for a course that started in February.
He will now join his course in July.
The International Students' Association president Lukas Kristen said the problem was affecting students and their partners.
"Immigration New Zealand is just taking a very long time to process applications, which leads to students either missing out on their courses, or it leads to students being separated from their partners and potentially family."
The chief executive of the private education and training provider, Aspire2 International, Clare Bradley said while some students would join a later intake, others went to Canada and Australia.
Ms Bradley is on the board of Independent Tertiary Education (ITENZ) and said even if visas were now approved, fees of late-arriving students would never be recouped.
She said the industry had suffered multi-million-dollar losses and the cost would be significant for universities, too.
Polytechnics and institutes of technology were being hit hard, at a time when they were already under considerable financial strain, she said.
Trust in New Zealand among agents and students was damaged and the industry was having to redouble efforts to promote itself.
Mr Lees-Galloway said the restructure caused short-term delays but would hopefully lead to quicker processing times, and higher-quality, more consistent decisions in the long-term.
The question of whether more staff should have been recruited last year was a question for INZ, which was doing everything it could to make the changes run smoothly but was also scrutinising applications more than it used to.
"That's why I've indicated to Immigration New Zealand that I want them to keep me closely informed about how things are going and what they are doing."
Education institutes had been making their views known about the delays, he said.
"I've certainly heard a lot from education industry but by the same token, the education industry needs to recognize that as a government, we have a view that they need to move from volume to value.
"There have been unintended consequences of the education system being used as a backdoor to residency. And so, Immigration New Zealand is rightly tightening up its processes."
INZ visa services manager Michael Carley said it had seen an increase in applications which needed greater assessment and verification.
Applications from India between November and February increased by 42 percent. INZ said the primary reasons for that rise were thought to be last year's post-study work visa changes and the decision not to review in-study work rights.
The ministry was in seeking reasons why some student visa applications were taking longer to finalise, Mr Carley said.
"INZ appreciates that the increased processing time is impacting some education providers and we have received feedback from some providers regarding their concerns about longer processing times.
"INZ has also undergone a large change programme over the last 18 months, which has seen the consolidation of visa processing by type."
International education contributes more than $5 billion to the New Zealand economy and is the country's fourth largest export earner, supporting almost 50,000 jobs.
First-time student visas are down seven percent in the year to May compared to the previous year. Enrolment numbers are not yet available.