Immigration officials told a student they made mistakes in processing his application - but refused to refund him because his fees had been spent in reassessing its decision.
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Graduate Zaid Patel was twice turned down for a visa to study computing at Unitec.
The first application took six months to process so he missed his course start date, and the grounds for rejection were suspicions that he was not a genuine student.
"So we applied back again and after 15 days they just rejected the application without an interview," said his sponsor, his Auckland-based cousin Zaheer Patel.
"They say that they're unable to prove the relation between me and my cousin," he said.
"So finally I complained through the complaint process and also complained to the Ombudsman."
In a letter to him, Immigration New Zealand accepted it made mistakes but refused to refund fees.
"We refund fees only in the cases where there has been no work undertaken," it said. "In your case, an immigration officer had done substantial work in reassessing your application following the initial decline decision."
By the time he received the letter, Patel had got a UK visa - in a fortnight - and started a masters degree in England with a scholarship, so had no need for a visa.
The number of rejected student visa applications from India doubled last year to more than 5,000.
Immigration advisers this week raised concerns that the use of data analytics and risk profiling could be affecting rejection rates in visa processing.
Most people give up on lodging complaints as temporary visa decisions cannot be appealed, said Zaheer Patel.
"Both student visa applications were rejected with 'There is no right of appeal or reconsideration against a decision on a temporary entry class visa application made outside of New Zealand.'
"This is a biggest excuse INZ officers use in the shadow of immigration law to keep rejecting his visa applications," he added.
"Both visa applications were poorly evaluated by INZ officers and it is kind of fraud from immigration in my view where an applicant can't go to the court or ask for review until he makes another application paying new fees."
His cousin wrote to INZ: "I have been waiting for student visa for more than one year just to complete a one-year post graduate study at Unitec Auckland.
"It's very shameful for New Zealand Immigration that genuine students don't get visa to study due to INZ assessment officer's hypothesis approach which is not based on paper-based evidences.
"New Zealand has lost a genuine international student and there might be many similar genuine applications possibly rejected by INZ with similar poor assessments."