Selling Homes to Fund Education: A Risky Proposition

In today's market, the traditional strategy of using real estate to fund higher education carries significant risks. Property values have stagnated, while education costs continue to soar.

Real EstateEducation CostsProperty ValuesEducation LoansFinancial PlanningReal Estate NewsSep 19, 2025

Selling Homes to Fund Education: A Risky Proposition

Real Estate News:Last week, I wrote about the gap between income growth and school fees. Salaries have inched up by around six percent, while many schools have raised fees by twelve percent or more. That strain is already visible for parents managing school-level expenses. But the pressure does not stop there.

When children want to go abroad or pursue higher education, the numbers change from lakhs to tens of lakhs. I have seen, in several cases, parents fall back on real estate to bridge this gap. Some take a loan against property. Others go one step further and sell an asset that the family has held for years. It is seen as a sacrifice worth making, a way to convert bricks and land into opportunity and security for the next generation.

Yet, in today’s market, this path carries far more risk than before. Property values have stagnated in many cities, while the cost of higher education has continued to rise sharply. Families that once believed they were unlocking wealth through property sales are sometimes finding that the returns barely cover the bills.

If you ask parents, they will most likely say that selling property to fund a child’s education is a responsible decision. Parents feel they are unlocking an asset to invest in their child’s future. After all, what use is land or a flat if it cannot help secure a better life for the next generation? For years, this logic seemed sound because real estate values kept rising. By the time a child was ready for higher studies, the family home or plot had appreciated enough to cover the cost.

But the numbers today tell a very different story. India’s residential property markets have slowed sharply over the last decade. Prices in many cities have barely moved when adjusted for inflation. According to market research, unsold housing stock in the top seven cities touched more than 5.6 lakh units in mid-2025. This may reflect not only oversupply but also weak demand. A property listed today can sit idle for months before it finds a buyer, and the final sale price often disappoints. The old assumption of steady double-digit gains has simply broken down.

Now place this against the rising cost of education. In India, fees for professional degrees have multiplied. A medical degree in a private college can cost over ₹50 lakh. An MBA from the Indian Institutes of Management is now between ₹20 lakh and ₹25 lakh. Liberal arts and engineering programs in leading private universities are not far behind. And when students look abroad, the figures escalate dramatically. Tuition plus living expenses in the United States, the United Kingdom, or Australia can easily touch ₹50 lakh to ₹1 crore for a single course.

The gap between property values and education costs has widened to the point where the old strategy no longer holds. Education inflation in India has averaged around 10 to 12 percent a year, while average salary growth has been closer to 6 percent. Property appreciation has lagged behind both, often in the range of 2 to 4 percent in many metros. The result is a financial mismatch: an asset that is barely growing is being sold to pay for an expense that is rising at double digits.

The picture becomes starker when we look at how families are filling this gap. According to Reserve Bank of India data, outstanding education loans in the country nearly doubled between 2019 and 2025, rising by about 95 percent in just six years. By late 2024, the total outstanding stood at over ₹1.2 lakh crore. This means that even after selling property, many households are still forced to borrow. In other words, the property sale does not solve the problem. It only delays it.

This is why the decision looks less like smart planning and more like a desperate compromise. Parents assume they are converting a stable asset into opportunity, but in reality, they are exchanging long-term security for short-term relief, often at poor value.

When a family sells property to fund education, the financial hit goes beyond the immediate cash outflow. Real estate in India is not just an asset on a balance sheet. It is often the family’s safety net, the one thing parents believe will protect them in retirement or during an emergency. Giving it up for a degree leaves them vulnerable. Once the property is gone, it rarely comes back. And unlike loans that can be repaid over time, a sold asset cannot be recovered.

The risk extends to retirement security. Many middle-class families rely on property as their fallback once regular income stops. Selling it in mid-life to pay for education can mean fewer resources when medical costs rise or when parents themselves need financial stability. The irony is that parents sacrifice their only safety net for their children, only to risk becoming dependent on those very children later in life.

There is also an emotional weight. In countless towns and villages, land is more than a financial investment. It is heritage. It is the link between generations. I have spoken to families who sold ancestral plots to pay university fees, only to later feel a deep sense of loss. One father told me he felt he had “cut the roots to water the branches.” The land that was meant to pass down became a payment slip for a two-year course.

But families do not make these choices in isolation. They are nudged constantly by a system that normalises such sacrifices. Banks and financial institutions advertise education loans as “dream enablers.” Brokerage firms promote loans against property as an easy solution, showing smiling children boarding flights to foreign universities. Influencers on social media share stories of lavish foreign degrees as the ultimate success symbol. Neighbours and relatives talk of sons and daughters in London or Boston as if that is the benchmark of parental achievement. In this climate, parents feel they have no option but to deliver, even if it means parting with the home they worked decades to buy.

Selling property or pledging it becomes framed not as a last resort but as an expected step in the journey. Yet the numbers show the imbalance. While outstanding education loans have crossed ₹1.2 lakh crore, India’s residential real estate returns have been stuck at low single digits for years. One side of the equation is racing ahead, the other is crawling. This is why the decision, although made with love and sacrifice, often ends up hurting both parents and children.

The child graduates, but the family is left without the cushion of property, and sometimes still saddled with debt. The system of easy credit, social pressure, and rising tuition has created a loop where parents keep giving more, but end up with less security than ever before.

I am not saying that parents should deny their children higher education. The question is about how we fund it. Selling property should no longer be the default answer. It leaves families exposed at the very time they should be building security. There are better paths, even if they are not easy. Education loans have grown rapidly because they spread the cost over years, allow the student to share the repayment once employed, and come with tax benefits on the interest. A loan keeps the property intact, so the family does not lose its long-term anchor.

For those who have assets, a loan against property can still be an option, but it is worth exploring only after comparing interest rates, repayment timelines, and whether a standard education loan would suffice. Planning ahead is equally important. If children are young, parents can begin early by setting up dedicated investments in mutual funds or other growth instruments. This builds a separate corpus over time, so the family is not forced to make painful decisions later. Scholarships and less expensive alternatives also deserve a harder look. A degree abroad may sound prestigious, but the financial scars of funding it can last much longer than the glow of a convocation photo.

I have seen the cost of these choices up close. Families that sold their only backup. Parents who entered retirement without a home of their own. Young graduates who returned with a degree, only to watch their parents struggle because the house was gone and a loan still remained. That is why I believe it is time for parents to pause. Selling property to pay for education is not the same as it once was. Real estate no longer delivers the returns it did, and education costs are outpacing everything else. The sacrifice is real, but the payoff is not guaranteed.

So if you are standing at this crossroad, I urge you to think twice. Explore loans. Plan early. Look at alternatives. Keep your property as the safety net it was meant to be. Because once it is gone, rebuilding takes decades, and sometimes it is not possible at all. The dream of a degree should never come at the cost of a family’s only foundation.

Frequently Asked Questions

What are the risks of using real estate to fund higher education?

The main risks include stagnating property values, rising education costs, and the loss of a long-term safety net. Selling property can leave families vulnerable and without a financial cushion, especially in retirement.

How have property values changed in recent years?

Property values in many Indian cities have stagnated over the past decade, with prices barely moving when adjusted for inflation. This contrasts sharply with the steady appreciation seen in previous years.

What are the alternatives to selling property for funding education?

Alternatives include education loans, setting up dedicated investments early, exploring scholarships, and considering less expensive educational options. These methods can help spread the cost over time and reduce financial strain.

Why are education costs rising so rapidly?

Education costs in India have been rising at an average of 10 to 12 percent per year, driven by factors such as increased demand for private education, higher operational costs for institutions, and the growing popularity of prestigious foreign universities.

How can families plan ahead to avoid selling property for education?

Families can plan ahead by starting dedicated investments early, exploring scholarships, and considering more affordable educational options. Early planning can build a separate corpus to cover education costs without sacrificing long-term security.