Your Local Authority is correct; the discounts are quite clearly laid down in legislation and modular flight training does not count for the reason stated. Actually, integrated flight training wouldn't count either!! Unlikely to get anywhere on appeal.
The only one that would qualify for a discount would be an aviation degree where you also study for the ATPL ground exams.
If you live on your own, you can get 25% single person discount.
Cheers
Whirls