A crackdown on bogus colleges is damaging genuine institutions whose overseas students have been unfairly denied visas.
Private education firms say they were not told that they had to register with the Department for Education and Skills under rules introduced in January.
The first one company heard of the register was when overseas students accused it of running bogus courses after they were refused extensions to their visas .
FE colleges and training companies are obliged to register with the DfES before students can get visas because of concerns that fake institutions were being used as a front for illegal immigration.
More than 250 institutions were closed last year after immigration investigators discovered they were used for visa scams.
Elaine Powell, who runs Aspire, a training company in Birmingham, said it had been assured by the DfES in March last year that it was regarded as genuine. She said she was never told about the register. She took out a pound;90,000 loan for new buildings. Now, 200 of around 270 students have left after they heard the company was supposedly "bogus".
Keith Best, chief executive of the Immigration Advisory Service, said: "We hear about this frequently. There are colleges that are bona fide who aren't on the list because they weren't aware of it, and we also fear there are some on the list which shouldn't be."
Ms Powell has not drawn a salary in six months and has had to borrow money from friends and family to pay bills.
She said: "We get no government funding. We rely on income from overseas students. But this has damaged our reputation.
"Students whose visa applications were rejected have threatened me because they thought I had conned them."
Her college is now registered, but she has had to make four staff redundant because of the loss of students. She says others have been working for no pay.
Ms Powell doubts whether she will be able to rebuild her business, but says her only legal redress would be a judicial review, which does not offer compensation.
Pete Moss, an immigration adviser with London legal firm Bates, Wells and Braithwaite, said the legislation is being implemented too harshly.
He says one of the students he represents applied for a visa extension in December, before the legislation came into force, but because the Home Office took three months to process her application it was rejected under the new rules.
He said: "I think the Home Office ought to give way now. The student and the college were acting in complete good faith. But the Home Office has refused to change its mind."
Appeals were likely to cost students about pound;1,000, Mr Moss said. At least 10 students at Aspire are also pursuing cases funded by legal aid.
The London College of Traditional Acupuncture and Oriental Medicine, where Mr Moss's client was studying, has been established for 13 years and is now registered.
Susanna Dowie, the principal, said she only heard about the new registration system because this student had had her application rejected.
Beatrice Merrick, director of services and research at the UK Council for Overseas Students, said FE colleges with multiple sites also suffered because the name on the student application form did not always match the name on the register.
The DfES has been working to solve that problem during the past few months, she said, but Home Office advice published on its website did not mention the need for registration until March, three months after the rules had come into force.
A DfES spokesman said: We have attempted to ensure providers who need to register have had a reasonable opportunity to do so."