Arbeitlosengeld:Strange policies for International (Non EU students) with Vertrag(Contract)

As most of you know, Arbeitlosengversicherung is one of the statuatory social insurance we pay  every month ,some percentage of our salary/income. This concerns every student /Phd student who is Non-EU student and who is on a Vertrag.

Dear fellow Phd students/ Pratkikants,
Recently, I was involved in helping a fellow Phd student who has just finished his Phd and claim ArbeitlosenGeld.
I have strange news to say to all of you I have just listed out the exact status of the Student and what has happened.

• Came to Germany on a student VISA.
• DOES NOT HAVE Niederlassungerlaubnis.
• Submitted Phd thesis.
• Got his VISA status change to the Arbeitsuche- visum at the Auslaenderbehoerde.
• Approached the Arbeitsamt for Arbeitlosengeld- They said Not possible as the VISA states "VISA Expires on getting support from Offentlische mitteln". They say that Arbeitlosengeld is a type of Offentlische mitteln so we cannot give.
• On the other hand, he has in the past 2 years paid the Arbeitlosenversicherung for more than 12 months. This gives him the qualification to apply for this arbeitlosengeld.

Then as suggested by the Arbeitsamt he approached the Auslaenderbehoerde to remove the statement on the VISA, which they disagreed to do so.
So based on all this I came to the conclusion that the Phd Students who are on an Arbeitsvertrag/werkvertrag during their Phd(and who pay the Arbeitlosenversicherung) are paying this Insurance (Has it gone to dogs ?) who are itechnically not eligible for it . Then why to pay for it.
Is it true that we are paying the insurance money not for us at all ???
Or anyone else have any other experience. It will also help me as I was there during most of this process as a Translator. I found it very strange Bureaucracy, as we pay a social insurance which is not valid for us.
I am happy to hear back even on phone 017676797560. I am just trying to help a friend in need. May be they need to change the law in this regard.
Thank you in Advance from KielKiran.