Yes came across this a couple of times in a previous life.
To be fair to the student, they must be informed of the evaluation, that they are not up to it, of more than one instructor. Not a pleasant duty to tell a person that you think they should "try something else" instead of flying.
It is just plain wrong to take their money and carry on training until he or she gets the hint.
Actually I wished someone had told me to take up another line of work all those years ago, as I would peobably be a lot better off! Too late now though.