Fantasy: Visiting Europe on $10 a day.

Truth: In the late '60s, but no more.

Fantasy: Visiting Europe in the '80s on a shoestring budget.

Truth: It can be done with careful planning and close budgeting.

Students have always known how to travel on the cheap side. And it's no surprise that as inflation wrings purses of their last sous, other travelers are adopting some of their budgeting techniques.

Hosteling, a form of low-cost, dormitory-style accomodation, is prime among them. Chief among its advantages is cost: $7-10 a night compared to the more than $70 you might drop at one of London's first-class hotels.

Hostling, as Michael Frome describes it in Hosteling U.s.a. (East Woods Press, $6.95) "means traveling under your own power -- biking, hiking, canoeing, skiing and horseback riding -- living and traveling simply in a spirit of fun and friendship, and using youth hostels as overnight accomodations."

Each hosteler carries an AYH pass, sheet sleeping sack and personal cooking and eating utensils.

Disadvantages include diminished creature comforts -- such as lack of privacy in large dormitory-size rooms -- and strict regulations governing curfews. Gained, however, is the camaraderie of a diverse group of travelers. cFor those on a tight budget, the low price may outweigh discomforts.

With the initial membership fee of $7-14, the hosteler is eligible to stay in any of the 3,000 hostels in Europe (or those in the United States). If you choose the hostling route, American Youth Hostel executive director Tom Newman advises:

Figure out where you want to go; get a copy of the International Youth Hostel Handbook (Vol. 1: Europe and Mediterrannean; or Vol. 2: Africa, American, Asia, Australia; each $6) for hostel locations and addresses; get maps of the areas you plan to visit; and utilize the cost-saving tips of such budget guides as Let's Go: Europe.

The majority of the 100,000 memberships issued last year by AYH, were used for European hosteling, says Newman, although many were solely for domestic travel. By May of this year, the number of memberships sold, says Newman, was "30 percent ahead of last year."

He advises making reservations well in advance (4 to 6 weeks ahead) when traveling at the height of the season (through August) or when staying at any of the key hostels in major cities. The maximum stay is about three days.

Let's Go: Europe 1981-'82 (one of six in the Let's Go series written by the Harvard Student Agencies, published By Dutton, $6.95) is not just for students, stresses Jim Conant, editor of the '82-'83 edition, but for "those who fancy themselves as budget travelers, as somewhat adventurous, or as young travelers."

Conant envisions this sort of traveler possibly finding a low-cost hotel or pension, rather than "dirt-cheap places." For a little more money, he says, a person not tied to a rock-bottom budget can feel more at home, more comfortable and at ease. To select accomodations, Conant advises travelers to read a budget guide with their real needs in mind, weighing the importance of surroundings versus price.

Recent versions of Let's Go (which has been sending its researchers into the field since the early '60s) have been "de-urbanzing its coverage, decentralizing it, and defusing it toward the countryside," says Conant. "We are trying to enrich people's experience by giving them the confidence to go to more out-of-the-way places, smaller places where they wouldn't go without us."

"Travel intensively rather than extensively," is Conant's advice to the first-time European vacationer."Try to travel in only one country or one area. . . . Don't spend half your time in transit, or Europe will become a blurred kaleidoscope of countries."