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Money is tight for many students in Australia. Rent, travel, textbooks and daily costs keep rising while casual hours change. It can be tempting to plug the gap with an unsecured personal loan. This guide explains how unsecured personal loans for students work, how they differ from HELP debts, and the main risks to weigh before you apply.
Unsecured personal loans can cover almost anything, not just study costs. Because the cash is flexible and marketing focuses on speed, it is easy to treat a personal loan as a simple fix for lots of small problems.
Students often use them for:
HELP loans cover tuition and some approved fees, not day to day living costs. You also need to be in an eligible course and meet residency rules. When scholarships, family support or extra work are not available, private lenders fill the gap and promote fast approvals.
Some online lenders advertise decisions within about 60 minutes and same day funding for approved applications. That convenience also means carrying separate consumer debt on top of any HELP balance you already have.
Unsecured loans are not tied to a car or a house. The lender relies on your income, bank statements and credit file. If you default, they cannot repossess an asset, but they can list a default and send the debt to collectors.
A typical setup would let you borrow a set amount, often between $500 and $10,000. Then, you will repay it over 6 months to 5 years on a fixed schedule, and pay interest and fees from day one.
Comparison sites show average unsecured personal loan interest around 13.8% per year across the market, with major banks offering unsecured personal loans roughly in the 7% to 22% range. Fast small and medium loans can be much higher. For example, one well known online lender advertises a medium loan interest rate of 47.62% per year with a comparison rate of 65.66%.
HELP debts are income based. From 2025 to 2026, compulsory repayments start once your income is above $67,000 and apply only to the income above that threshold. Indexation is now capped so that HELP debts cannot grow faster than wages and recent indexation rates have been reduced from above 7% down to about 3% to 4%.
Unsecured personal loans are standard consumer credit. The rate is higher, and repayments are due regardless of whether your hours are cut or you are still studying full time.
HELP debts grow at the indexation rate, not at a normal interest rate. On a $20,000 HELP balance, a 4% indexation rate adds about $800 for the year.
Private loan interest compounds on the remaining balance. A mainstream unsecured personal loan at around 14% on an $8,000 balance would add roughly $1,100 in interest over a year if the principal barely changed. A high cost medium loan at 47.62% on $4,000 can add well over $1,800 in interest and fees over 12 months.
HELP repayments only start once your income passes the threshold and are taken through tax. If you are earning below $67,000, there is usually no compulsory repayment yet.
An unsecured personal loan starts immediately. Fixed weekly, fortnightly or monthly direct debits mean you must keep enough money in your account every time, even if shifts are cut, you get sick or you are on an unpaid placement. The loan does not automatically adjust to your income.
Personal loans taken in your late teens or early twenties can still be running when you graduate and start full time work. Repayments reduce how much you can save for a bond, relocation costs or a car. If you fall behind, the damage can show on your credit file just when you are starting adult life.
HELP debts do not appear on your credit report. Private personal loans do.
Most private lenders check your credit file with Equifax, Experian or Illion. Each application leaves an enquiry. Serious late payments can be recorded as defaults that stay on your file for up to 5 years. A single default can make it much harder and more expensive to get a car loan, credit card or even some phone contracts later.
If a personal loan repayment is missed, late fees and interest keep building. Many lenders charge a flat fee for each missed direct debit, often in the $20 to $50 range, on top of ongoing interest. If arrears continue, the lender can hand the account to collection agencies and ultimately record a default.
If any of these fit, more credit may increase risk rather than reduce it.
HELP and no interest loan schemes are designed for people with low income now and more later. Study support material explains that HELP repayments start only once income passes $67,000, and are based only on the portion above that threshold.
Charities and community organisations also offer no interest loans for essential items such as whitegoods, medical costs or study equipment. These products have limits and rules, but they do not charge interest and they are less likely to damage your credit record if you hit trouble.
If you already have a personal loan and are falling behind, contact the personal loan lender early. Under the National Credit Code, lenders must consider a reasonable hardship request if your circumstances have changed.
When you contact them, explain what has changed, what you can afford to pay for now, and when you expect your situation to improve. The lender may offer smaller repayments for a time, a longer term or a short pause. A formal hardship arrangement is usually better for your credit than simply missing payments and ignoring calls.
If you regret the loan, you still have options. You can:
Yes. If you are at least 18, live in Australia and can show regular income, many lenders will consider you. Some limit how much of your income can come from Centrelink.
Market data shows average unsecured personal loan interest around 13% to 14% per year. Bank personal loans can range from about 7% to above 20%. High cost online loans for smaller amounts can exceed 40%. Always check the comparison rate, not just the headline rate.
Yes. Applications, missed repayments and defaults all affect your credit score. A default can stay on your file for up to 5 years even after you pay the debt.
Both carry risk. Personal loans lock you into fixed repayments. Credit cards can turn into long term debt if you only pay the minimum. It is usually safer to exhaust non credit options first.
Tell your lender early, pay what you can, and ask about hardship. Contact the National Debt Helpline or a financial counsellor for support. If you believe the lender did not lend responsibly, you can take your complaint to AFCA.
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Disclaimer
CashLend, a trading name for Simple Finance Group Pty Ltd (ABN 70 626 186 418) and holder of Australian Credit License 509422, operates as a lender and referral service. We do not endorse any specific credit contract. Upon receiving an offer or referral to a lending partner, they will evaluate your application, provide a suitable credit contract, and inform you of the outcome. Both we and our lending partners will disclose all fees, charges, and terms before any contract is entered into. We may receive a referral fee, the amount of which is not determinable. We advise seeking independent legal and financial counsel before engaging in any financial products. The rates and loan terms provided on this website are for indicative purposes only. CashLend, as a lender, may process applications within 60 minutes, and loan disbursement may occur immediately upon contract signing. However, the timing of fund disbursement depends on your banking institution's policies.
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