Frankly, I do not think US lender or collection agency has right to go to Nepal to collect loan from Shakti, let alone from his parents. There are hundreds of thousands of US students with school loans who never paid their loans - simply because not all students turn out to be successful enough to pay off their Huge Loan! I never heard school going after parents asset. In some cases, if it was a federal loan, IRS withheld income tax refunds of those students in lieu of loan payment causing shockingly embarassment to those borrowers! In simple American English, that school "screwed" itself lending money to a foreign student. I wish you disclose that school so that all Nepalese go their and start applying for loans! I bet that school learnt its lesson already and will never repeat that practice again. As Wakil suggested, filing bankruptcy may be an option, but that will cost money too! Bankruptcy lawyers are not cheap either. My best informal and free advice is what Wakil Saab suggested. Keep Quite and go on with your life! It may be immoral .. afterall school trusted this guy .. he got almost free education in the US, but given the circumstances, what else he can do? I would strongly advise to pay off the loan, but that is not the purose of your question! Good Luck! Again: I am not a lawyer .. so typical disclaimer goes along with my post!