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UPDATE 1-18 states sue U.S. Education Dept over student loan relief

(Adds states, consumer groups, background)

WASHINGTON, July 6 (Reuters) - More than one-third of U.S. states on Thursday sued the U.S. Education Department and its secretary, Betsy DeVos, over a recent decision to suspend rules intended to speedily cancel student-loan debt of people defrauded by for-profit Corinthian Colleges Inc and others.

Last month DeVos pressed pause on the rules, due to take effect on July 1, saying they needed to be reset.

Massachusetts, 17 other states and the District of Columbia said in a filing in U.S. district court in Washington, DC that the department broke federal law in announcing the delay without any public engagement process.

DeVos, a Republican and advocate of public-private partnerships in education, said she wanted to pause the rule that accelerated the existing debt cancellation process because the steps were muddled and the rule "puts taxpayers on the hook for significant costs."

The rules were finalized in the last days of the administration of President Barack Obama, a Democrat who overhauled federal student lending.

The attorneys general for California, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maryland, Minnesota, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia and Washington also signed onto the suit.

Consumer groups Public Citizen and Project on Predatory Student Lending sued separately on Thursday to lift the delay. (Reporting by Lisa Lambert; Editing by Jeffrey Benkoe and Steve Orlofsky)