The Trump administration has rescinded a policy that would have barred foreign students from staying in the U.S. if they take online-only classes for the fall semester.

The decision came after Immigration and Customs Enforcement (ICE) announced the policy on July 6, under which international students would not be allowed to stay in or come to the country if their schools operate online due to the pandemic.

The policy prompted a string of lawsuits brought by universities and a coalition of 17 states. Harvard University, with overseas students comprising more than 20 percent of the student body, and the Massachusetts Institute of Technology (MIT), whose foreign undergraduates make up nearly 30 percent of enrollment, were the first to file suit.

The institutions claim the regulation is "arbitrary and capricious" — arguing that the agency is not considering the health of students, faculty and staff members — and has not taken into account the "reality" of the pandemic continuing.

A dozen "friend of the court" briefs were filed in support of the Harvard and MIT lawsuit by hundreds of universities and some of the country's largest tech companies, including, Google, Facebook and Twitter, arguing that the policy would harm their businesses.

U.S. District Judge Allison Burroughs announced that the government had agreed with Harvard and MIT to rescind the policy on July 14.

"President Trump's arbitrary actions put the health and safety of our students and communities across the country at risk," said Xavier Becerra, California attorney general, in a Twitter post following the announcement of the rescission. California is among the 17 states that filed suit against the policy.

"The Trump administration appears to have seen the harm of its student visa directive but it shouldn't take lawsuits and widespread outcry for them to do their job," he said.

U.S. visa requirements typically do not allow international students to take more than one course — or three credits — online each semester. In March, ICE waived those requirements when the pandemic forced colleges nationwide to switch to virtual instruction.

On July 2, the American Council on Education (ACE) and 38 other groups wrote to the U.S. State Department and the Department of Homeland Security, seeking flexibility into the next academic year.

But four days later, ICE reversed the relaxed regulation, requiring foreign students to transfer to institutions that offer some in-person instruction — or leave the U.S.

The agreement reached on July 14 reinstates the earlier policy implemented in March, which allows international students to take all their classes online and remain legally in the country amid the pandemic.

The rescission of the ICE directive "demonstrates the importance of international students to the United States and shows that together with one voice, all of higher education, the business community, and many others across our nation are making it clear that these students continue to be welcome here", said ACE President Ted Mitchell in a statement.

"International students are an extraordinary benefit not just to American higher education but to our entire nation, resulting in a wealth of new ideas, cultural connections, cutting-edge technology, and life-saving medical advances, including in the fight against COVID-19," said Mitchell.

He also noted that the economic benefit that comes with the roughly 1 million international students in the U.S. is also immense, yielding about $41 billion and resulting in more than 450,000 U.S. jobs.