Hey! Welcome to ATAR Notes.
I'm sorry to hear about your predicament and your dramatic grade drop. It's a difficult decision to make, and as a current year 12 I know how stressful it is. Sending encouragement your way.
It's great to see you've been weighing up the pros and cons. That's the most logical approach to it, and I can see you've also taken into account the toll either choice could take on you mentally and emotionally. The best thing to do is not worry about what anyone else will think of you for doing three years of VCE - your friends will not think you're stupid, and neither will your family. If anything, you will have support and space to do what's best for you.
If you cannot cope with the work levels right now, the best thing to do is take a step back and, in your words, "breathe". If you take the time to think about it, and your grades make no changes, the best choice will probably be to take three years to finish your VCE. There is no shame in doing what's best for you. If it's different to what others do, who cares? You're going to be giving yourself the best opportunity possible. "On time" is subjective. There are thousands of students every year who enter university one, two, three, twenty years "late". Nobody will judge you for it. My grandmother went back to school to finish year 12 when she was over 50 years old.
Your confidence will only be affected if you let it be.
Also, Monash will be more than happy to take you (and your money), no matter what age or however many years it takes for you to complete your VCE. But just remember that the workload at university, especially in an advanced degree, can be pretty intense. I recommend talking to your careers counselor and your school principle about your options. I have confidence that you can do anything you want to. You just need to make your choice and stick with it. Besides the advice given above, I don't think there's much more we can give you except the support of our community.
Best of luck,
~Poet