In the case that a student is given a unfair grade and the professor refuses to correct it, the next step is to formally appeal the grade. First appeal to the introductor, if the issue remains unresolved, then to the department chair, Dean, provost, and finally the hearing committee for final decision.
In most of grade appealing cases, the issue will be resolved with the instuctor. There's no point for a instructor to insist giving a student wrong grade if a student presents credible evidences.
In your case, it's only one test, the instructor or TA can change the grade by him or herself at will without any consequence, yet they refused to do so. It's very strange indeed.
All in all, if your niece did not cheat, you have nothing to worry about. Just find out the process from university catalog or from her advisor or department chair and follow it. The issue will be resolved. The bottom line is that no university will benefit from giving a student wrong grade. Someone along the chain of command will make the correction.
If there is any wrongdoing in your niece' part, that's another issue. Very serious indeed.
