The decision marks a stunning retreat for the Trump administration, which left schools and students reeling following a July 6 announcement that spurred additional lawsuits and condemnation from a growing list of states, schools, politicians, labor unions and tech sector giants. That included the powerful U.S. Chamber of Commerce.

A government attorney during the hearing did not cite any reasons for the Trump administration's reversal.

Now that the policy and related guidance to schools are withdrawn, foreign students can continue to follow relaxed government standards on the use of online classes - standards the government set out just a few months ago during the coronavirus pandemic's springtime peak.

The Trump administration insisted in court filings that its now-scrapped plans offered schools flexibility to restart their operations while balancing public health concerns and national security interests. The administration also argued its plans were only plans, and would not carry the weight of law until temporary regulations were formally crafted.

"A solely online program of study provides a nonimmigrant student with enormous flexibility to be present anywhere in the United States for up to an entire academic term, whether that location has been reported to the government, which raises significant national security concerns," government attorneys argued in court filings this week.

Harvard and MIT retorted that they and their students faced "irreparable injury" if the government's directives were not halted.

"Indeed, they face such injury right now," the schools alleged in a court filing on Tuesday. "The government is enforcing the Directive at airports and consulates across the world, turning students away because they attend universities that have made the considered decision to offer instruction online this fall."

The universities also noted the State Department recently updated its Foreign Affairs Manual - which governs the issuance of visas at U.S. consular offices overseas - to bar visas to students who will not attend any in-person classes in the U.S.

"The government's suggestion that the Directive is no more than an 'announcement' of a future rule is refuted by its actual conduct," the schools argued.

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