"All debt is bad" is a tidy rule that doesn't survive contact with real life. A more useful framing asks what the debt is doing for you: is it buying something that grows in value or earning power, or is it funding consumption at a cost? That distinction — rough as it is — explains why a mortgage and a payday loan aren't the same kind of thing.
The rough dividing line
So-called "good" debt tends to be lower-cost borrowing against something that holds or builds value, or that increases your earning potential — a mortgage, or in some cases a student loan. So-called "bad" debt tends to be high-cost borrowing for things that lose value or are consumed quickly — high-interest credit card balances carried month to month, or short-term high-cost loans.
Why the labels are imperfect
The framing is a starting point, not a law. A mortgage you can't afford is not "good" because of its category, and a modest, manageable credit card balance cleared each month isn't ruining anyone. What matters more than the label is the interest rate, whether the repayments fit your budget, and what you're getting in return.
UK student loans are their own thing
UK student loans don't behave like ordinary debt — repayments are typically a percentage of income above a threshold, they stop if your income drops, and any remaining balance is written off after a set period. That makes them function for many people more like a graduate contribution than a conventional loan. The specifics depend heavily on which repayment plan you're on, so check gov.uk for the rules that apply to you.
The practical takeaway
Don't lose sleep over low-cost borrowing against something durable that you can comfortably afford. Do prioritise clearing high-interest debt, which is corrosive regardless of what it bought — our payoff strategy guide covers how.