One of my relatives rationalized that trans and non-binary people with incorrect passports would still be free to leave the country...sure, but what would happen on their return? This was terrifying to contemplate.
The ACLU jumped on this and the executive order that initiated the change in State Department practices has not passed muster with the courts...so far. (See the article here: https://www.aclu.org/press-releases/appeals-court-denies-request-to-stay-order-preserving-passports-for-many-trans-nonbinary-intersex-citizens)
Given the stay, you can re-apply for your passport so it will correctly reflect your gender identity. If somehow the current administration attempts to push this to the Supreme Court, it's possible they could reverse the stay and uphold the executive order; until that time, however, at least you can have a passport that is accurate so that leaving the country and returning (hopefully) will not be fraught with anxiety over being stopped at the border on re-entry just so the current border control officers can mess with you if they feel like it, since that is the current flavor of many federal law enforcement officers, unfortunately.
The explanation can be found here on the State Department website:
You will need to complete an attestation; you are attesting to the following:
And you'll need to complete an application and, of course, pay the fee. It sucks if your passport was just renewed, with the incorrect gender reflected, where you parted with a couple of hundred bucks, including shipping, and that you have to do it again. If you were my child, and you could swing the money, I'd suggest you get this done ASAP.
The current climate in the USA is decidedly anti-LGBTQ+ and having a back-up plan for your own personal safety is not being paranoid. Not anymore. If you have people you trust that can loan you the money until you can pay it back in 6-8 months, this might be a worthwhile time to break that unwritten rule of not borrowing (or lending) money through family.
I'm grateful and DJ and Marie live in a progressive area and have resources. I know that isn't true for everyone. Be vigilant, be private, and be safe. In peace, the Author