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Essentially for some reason or other the loans are not being repaid - and mostly likely wont be repaid due to high unemployment among the people who took the loan.

I suspect that the GP simply meant that 85% of Indian loans are past due.

Rhetorically, you could consider them as being underwater if the asset purchased (human capital) isn't providing sufficient value (income) to service the loan.

think he means student loans with collateral not doing well due to variety of reasons defined here [1] and I think you are thinking about underwater mortgages as defined here [2] 1. http://goo.gl/21TmQm 2. http://goo.gl/UVNIFr