The Tertiary Education Commission is prosecuting three people who signed up for the Government's flagship fees-free programme under allegedly false pretences.
Earlier this year the TEC said it was looking into 50 cases of false declarations, and this morning it announced that action was being taken against three people.
The TEC has so far identified about 400 false declarations, almost all of which resulted in a caution or a warning.
Under the Education Act, anyone who makes a false representation in order to receive free tertiary education faces a fine up to $5000.
Fees-free is Labour's flagship policy to have the first year of tertiary education free.
A spokesman for the TEC said that the commission took people trying to rort the system very seriously, and the decision to prosecute followed extensive investigations and consultation with the Office of the Crown Solicitor.
It was also an important deterrent to those wanting to game the system, he said.
Most people signing up for fees-free can have their prior tertiary study and residency status verified automatically. Those that don't can sign a statutory declaration saying they are eligible.
"TEC takes action on every false declaration," the spokesman said.
"We have developed a graduated approach, ranging from issuing a caution or a warning in less clear or serious cases, up to prosecutions in cases where there is clear evidence an offence has been committed.
"For legal reasons, TEC is unable to comment on the cases before the courts or any active investigations."
To date, TEC has identified about 400 false statutory declarations out of around 45,000 applications, or less than 0.01 per cent of all applications.
"All false statutory declarations identified have resulted in the individual being made ineligible for fees-free and all have been cautioned against making a false representation," the spokesman said.
Last month the TEC told the Herald that about 50 cases were being investigated and a "very small number" could be prosecuted.
"It is impossible to ascertain with complete certainty how many are genuine mistakes, and how many are deliberately dishonest. The important point is that we have processes in place, and that all false declarations that are identified are investigated," a TEC spokesman said.
Fees-free numbers, released by the Government last month, showed that 47,000 students or trainees used the policy in 2018, much lower than the 80,000 Labour had initially expected. The cost was $270.8 million.
The low take-up has led the Government to re-allocate $200 million from the policy to the reforms of the vocational education sector.
Overall student numbers dropped from 310,000 in 2017 to 305,920 in 2018.
Education Minister Chris Hipkins claimed the policy had appeared to have "stabilised" a decline in student enrolments.
The Education Ministry's forecasts for tertiary education show it expects enrolments to drop slightly again in both 2019 and 2020 before lifting slightly.
Labour's original policy was to extend fees-free to cover two years' worth of fees after 2020, and then three years' worth from 2023.
As yet, there is no funding allocated for that post-2020 rollout.