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Missing a repayment on a student personal loan feels awful, but you are not the only one. ASIC research in 2024 found that 47% of Australian adults with debt, around 5.8 million people, have struggled to make repayments in the last 12 months. This guide is here to walk you through what happens next, what your rights are, and the steps that can actually help.
When a repayment date passes and the money is not there, the personal loan lender marks your account as overdue in their system. Often a direct debit fails, and you will see a dishonour on your bank statement. Many lenders then send a reminder by SMS or email and may add a late fee according to your contract.
In the early days the problem is mostly between you, the lender and your bank. It has usually not been reported as a default yet. That short window is when action matters most.
On the lender side, your account now shows as one payment in arrears. Staff can see your normal repayment amount, how many days past due you are, and whether you have contacted them about hardship.
If you reach out early and explain what happened, the notes on your file will reflect that you are trying to work with them. If you stay silent, the account simply shows as overdue and the automated collection process continues.
Australia has clear rules on when missed loan payments can become defaults. A single late payment does not become a default straight away, but it can still show in your repayment history.
Credit reports can record whether a payment was made on time or more than 14 days late for many common credit products. If a repayment is very late, and stays that way, it can become a default. Once a default is listed, it can stay on your credit report for up to 5 years, even after you pay it.
A credit provider can normally list a default only when:
If you do not catch up quickly, late fees and interest combine to make the balance grow. Many lenders charge a flat late fee each time a payment is missed, often between $20 and $50, and your usual interest keeps running on the full amount you owe.
Recent industry data shows that around 6.7% of personal loan accounts are behind on payments, a 38% increase in arrears since 2022. That pressure flows through to students who use these loans on casual income.
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The move from late to default is about both time and communication. If a repayment is more than 60 days overdue and at least $150, and the lender has sent the right notices, they can list a default with credit reporting bodies such as Equifax, Experian or Illion.
Before that point, your file may show late payments in your repayment history, but not yet a formal default. Once a default is listed, any future lender can see that you were seriously behind on a debt and may treat you as higher risk.
Complaints data shows what happens when problems are left to run. The Australian Financial Complaints Authority has reported tens of thousands of complaints each year, with financial difficulty complaints rising and many linked to personal loans.
There are published cases where banks or lenders started enforcement, listed defaults or passed debts quickly to collectors without properly dealing with hardship requests. In some of those cases AFCA has ordered compensation or changes to the loan. These stories highlight why it is important to speak up early and to escalate if you are not heard.
The hardest part is making the first call, but it can make the biggest difference. Before you phone or message the lender, take a few minutes to prepare.
When you speak to the lender, be direct and honest. Explain that you have missed a payment, describe the change in your situation, and ask to be assessed for hardship.
Under the National Credit Code, lenders must consider a reasonable hardship request when your circumstances change. A hardship arrangement is a formal adjustment to your loan, such as smaller repayments for a time, a longer term, or a short payment break.
Hardship arrangements are not the same as default. Industry guidance explains that hardship information is recorded differently from normal repayment history and is removed from your credit report after about 12 months. Lenders and credit bureaus generally do not use hardship flags directly in credit scores. That means asking for help early can protect you from worse marks like long term arrears and defaults.
If your lender refuses to discuss hardship, or simply keeps charging fees without giving a clear response, you still have options.
Start by making a formal complaint through the lender’s internal complaints process, in writing. Keep copies of your emails or letters. If you are not satisfied with their response, or if they do not respond within the required time, you can take your complaint to AFCA.
AFCA receives over 100,000 complaints a year across all products and has seen thousands of financial difficulty cases. Many involve personal loans and missed repayments. Their role is to review whether the lender followed the rules and to help find a fair solution.
While the complaint is open, try to keep paying what you reasonably can. This shows that you are acting in good faith and can reduce further arrears.
If you have already fallen behind and a late payment or default has been recorded, it will not disappear overnight. Repayment history usually stays on your credit report for 2 years and defaults for up to 5 years.
You can still improve the picture over time. Make every future payment on time, even if it is only the adjusted hardship amount. Once a default is fully paid, the record can be updated to show that it has been settled, which many future lenders view more positively than an unpaid default.
You are also entitled to a free copy of your credit report each year from each major credit reporting body. Check that entries are accurate. If you find errors, you can dispute them with the credit provider or the reporting body.
When you are behind on a student personal loan, it is risky to take out new high cost credit to cover the gap. Using another payday loan, a new personal loan, or extra buy now pay later limits to pay the first loan usually just shifts the problem.
A better approach is to stabilise your situation first. That may mean reducing non essential spending for a while, speaking with your university about hardship support, or seeking help from family or community services if that is an option.
If you feel stuck, or you are getting calls and letters you do not fully understand, it is time to get outside help.
The National Debt Helpline offers free, independent financial counselling on 1800 007 007. Counsellors can help you review your budget, talk to lenders, and understand your options. If you have already complained to your lender and are unhappy with the outcome, they can also help you prepare a complaint to AFCA.
Reaching out early means you have more choices and less damage to repair later.
Repayment history can record whether you paid on time or more than 14 days late. A single late payment may not ruin your score, but repeated lateness or serious arrears can add up.
Your arrears grow, more late fees and interest are added, and the risk of default listing increases once the debt is more than 60 days overdue and at least $150.
Yes, if you agree to a hardship plan and then make the adjusted payments, the account does not need to move into default. Hardship is recorded differently from a default on your credit file.
It can. Lenders for larger loans look at your past credit behaviour. A pattern of late payments or any default can make approval harder or push your interest rate higher.
You can contact the National Debt Helpline for free counselling and then lodge a complaint with AFCA if needed. Both services are free for consumers.
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