The decision will adversely impact hundreds of thousands of Indian students in the US.
It said that for the fall 2020 semester students attending schools operating entirely online may not take a full online course load and remain in the US.
The new regulation drew widespread backlash with many taking to social media to vent their anger.
The American Council on Education (ACE), which represents university presidents, said the guidelines are "horrifying" and will result in confusion as schools look for ways to reopen safely.
"On its face, the guidance released by the ICE is horrifying. While we would welcome more clarity about international
students studying in the United States, this guidance raises more questions than it answers and unfortunately does more harm than good," ACE President Ted Mitchell said in a statement.
"Regrettably, this guidance provides confusion and complexity rather than certainty and clarity," Mitchell said.
Of particular concern is a stipulation saying students won't be exempt from the rules even if an outbreak forces their schools online during the fall term. It's unclear what would happen if a student ended up in that scenario but faced travel restrictions from their home country, said Terry Hartle, the council's senior vice president.
"ICE is clearly creating an incentive for institutions to reopen, regardless of whether or not the circumstances of the pandemic warrant it."
The rule applies to holders of F-1 and M-1 non-immigrant visas, which allow non-immigrant students to pursue academic and vocational coursework, respectively.
Harvard University President Larry Bacow said in a statement that "we are deeply concerned that the guidance issued by US Immigration and Customs Enforcement imposes a blunt, one-size-fits-all approach to a complex problem giving international students, particularly those in online programs, few options beyond leaving the country or transferring schools."
More than 1 million of the country's higher education students come from overseas, according to the nonprofit Institute of International
US Senator Elizabeth Warren tweeted that kicking international students out of the US during a global pandemic because their colleges are moving classes online for physical distancing hurts students. It's senseless, cruel, and xenophobic. @ICEgov and @DHSgov must drop this policy immediately.
Senator Bernie Sanders was also quick to attack the new guidelines. Sanders, the Vermont independent, said the "cruelty of this White House knows no bounds."
are being threatened with a choice: risk your life going to class in-person or get deported," Sanders said in a tweet. "We must stand up to Trump's bigotry. We must keep all our students safe."
The move also drew immediate criticism from immigration advocates who say it is part of the Trump administration's ongoing attempt to restrict legal and illegal immigration, the USA Today reported.
The new policy is "clearly designed to chase foreign students out of the United States and to bar foreign students who were coming to the US from entering the country if the schools they are going to are only online," said Charles Kuck, an Atlanta-based immigration lawyer and representative of the American Immigration Lawyers Association, an advocacy group.
According to immigration lawyer Fiona McEntee, the decision is especially puzzling given the value of foreign students, which is quantifiable economically, the National Public Radio reported.
McEntee added that losing foreign students is a huge blow to university budgets, something that will impact domestic students as well. Similarly, the decision to attend classes in person impacts all students present, the report added.
According to an economic analysis by NAFSA: Association of International Educators, international students studying at US colleges and universities contributed $41 billion and supported 458,290 jobs during the 2018-2019 academic year, the report said.
The NAFSA blasted the rules and said schools should be given the authority to make decisions that are right for their own campuses. It said the guidance "is harmful to international students...at risk."
New York-based immigration attorney Cyrus Mehta tweeted that Students who attend schools that operate completely online will not be allowed to receive F-1 visas or enter in F-1 status or maintain F-1 status in the fall 2020 semester. So Trump is forcing foreign students to study in unsafe conditions during Covid-19.
Dozens of colleges have said they plan to offer at least some classes in person this fall, but some say it's too risky.
The announcement is the Trump administration's latest Covid-19 pandemic-related strike against legal immigration. Last month, President Donald Trump signed an executive order that will suspend temporary visas for foreign workers, including the popular H-1B and the J-1 visas until the end of 2020.