Lavpreet Singh (22) killed himself on Monday by consuming some poisonous substance as he was under stress over the unpaid loan, they said.
Villagers said that earlier his great-grandfather Joginder Singh, grandfather Nahar Singh, his father Kulwant Singh, and uncle Jagtar Singh too had committed suicide over the loan of Rs 8 lakh, the villagers said.
His mother Harpal Kaur said that he took the extreme step because he was unable to repay the loan. She demanded a government job for Lavpreet's sister Manpreet Kaur and a loan waiver by authorities.
The family had about 14 acres of land, out of which only one acre remains as the rest was sold to repay loans, a villager said.
Deputy Commissioner T P S Phoolka said the state government has included all eligible farmers in its debt waiver scheme.
He said that the state government had waived a debt of Rs 57,330 in the name of Kulwant Singh, Lavpreet's father last year.
The police said that it has registered a case and started investigations.