The Path to Lower Tuition: Breaking the Status Quo

The Path to Lower Tuition:
Breaking the Status Quo
Dominic Lynch
Danish Murtaza

© 2012 Dominic Lynch and Danish Murtaza
All rights reserved.
Printed in the United States of America
Second Edition

For the students of Loyola University Chicago

Table of Contents
Foreword
Vance Fried, Author of Better/Cheaper College
Introduction
An Education on Education: 1
Section One
The Administration: 11
Section Two
The Faculty: 21
Section Three
Athletics: 29
Section Four
Financial Aid: 37
Conclusion
A Second Renaissance: 51
Appendix I: 57
Appendix II: 59
Acknowledgements: 67

Foreword
uition has risen drastically over the last thirty years at both
public and private universities. Disruptive innovation in
higher education is beginning to reverse this trend. Tuition will
come down as costs come down. As disruptive business models
take hold, tuition will drop dramatically. In the not-to-distant
future, top quality education will be available in a residential
setting for under $5,000 a year. This will come from a business
model that is radically different from that of today.
However, much can be done now to reduce costs within
the existing business model. In “The Path to Lower Tuition:
Breaking the Status Quo”, Dominic Lynch and Danish Murtaza
present several proposals to lower cost without decreasing
quality at Loyola University Chicago. This is an impressive effort
for two college sophomores and worthy of serious consideration.
Costs can be substantially cut by simply eliminating
spending that does not provide value to the student.
Unfortunately universities refuse to eliminate unnecessary
spending because it means reducing payroll. Rather than reduce
payroll and charge students a lower tuition, universities chose to
charge students higher tuition in order to raise payroll.
Reducing tuition today does not require a great act of
intellect. Rather, it requires an act of will. The purpose of the
university is to provide a quality education to its students, not
pleasant employment for faculty and administrators. Tuition can
be reduced significantly today if trustees are willing to act in the
best interest of their students.
Vance H. Fried
Riata Professor of Entrepreneurship at Oklahoma State
University
Author of Better/Cheaper College: An Entrepreneur’s Guide to
Rescuing the Higher Education Industry
T

1
Introduction: An Education on Education
t seems to us that many people tend to believe that young
students do not like to concern themselves with economic
issues, political issues, or anything that goes on outside of their
Twitter or Facebook feed. Being that we are young people, we can
say this is certainly not the case.
We, the authors, like to stay up to date on the news,
whether it is foreign or domestic, economic or political. We had
read statistics about tuition in the past, such as the fact that
tuition had risen twice as fast as inflation in 20111, but we never
believed it affected us personally. However, attending college,
especially a private one, drove the point home to both of us that
rising tuition was a problem for students of our generation, and
we were no exception. Still, though, it did not seem to personally
affect us as we both received generous scholarships and
manageable loans. That mindset changed halfway through our
freshman year, and that changed spurred this report.
Our first discussion about writing this report came on the
heels of the announcement that tuition would be raised by 2.75
percent along with a raise in the rates of room and board by 3.0
percent and full-time student activity fees by 5 percent2 for the
2012-2013 school year. Being students, we were less than
satisfied to hear that we would have to pay more for school next
year than we paid this year and so we began to wonder: “why is
tuition so high and getting higher? Why won’t it just go down
for once? Is there anything we can do about it?” After several
long talks and coming to terms with our self-imposed challenge
we decided that we, as students, can do something about the
rising tuition costs. Our challenge was this report and we believe
our findings and proposals can realistically lower the cost of
tuition.
I

2
We didn’t have any connections with administrators and
we knew only a handful of faculty; we were freshmen after all.
We didn’t know where to start or what our project should even
encompass in the first place. To get started we did some basic
research on the Internet, gathering information about the rising
cost of college and what ideas were out there regarding lowering
tuition. Finals were nearing on our school schedules so we
agreed on a basic research schedule we would adhere by to
efficiently collect information and get our project underway. Our
preliminary schedule set dates for collecting and ending our
research, setting meetings to present our findings to each other
and, ultimately, write this report itself. Almost immediately the
schedule had to change as our ‘research’ proved harder than we
had thought and we realized that we had entered a labyrinth of
economic language (neither of us are finance or business
majors), administrative lag, and a system that we had trouble
making sense of. Instead of breezing through our report in two
months as we had planned we realized that it might take us the
entire summer of 2012 or longer to produce a quality plan to
realistically lower tuition.
As we read more and more about the current costs of
higher education, it became clear to us that a 2.75 percent raise
in tuition was not an anomaly or even an exception to the rule; in
fact, such raises are the rule. We read that the average cost of a
four year university education for the 2010-2011 school year was
$34,8053 while tuition a decade earlier was $20,1064. It was
incomprehensible to us, and to a point it still is, how tuition can
rise $14,699 in just ten years. We would oftentimes force
ourselves back into the research at hand after a protracted
conversation about $20,000 tuition and how that would affect
our lives today. Perhaps the most startling news is the most
recent: as of last year, student loan debt surpassed credit card

3
debt in America5. Neither of us own credit cards, but both of us
have taken out student loans.
Our research led us to read several informative books
about the state of higher education costs in the United States.
Books such as Higher Education? (Times Books, 2010) and
Better/Cheaper College (CCAP, 2010) showed us views of the
University machine that we had never considered before. It was
from books and reports like those that we adopted or otherwise
based several of the ideas that are showcased in this report.
One trend common in all the works we read was the
argument that institutions of higher education have begun to
lose focus of their main mission and, some would argue, the
purpose of their existence, namely, educating people. As Vance
Fried puts it in Better/Cheaper College:
Education must be grounded in the proposition that
learning is primarily a means to an end, not the end in
itself. Education should focus on the student, not the
Ivory Tower* and the interests of faculty and
administrators. Colleges today are focused on serving the
Ivory Tower, not their students6.
Fried’s claim is not without evidence; however his evidence
almost exclusively applies to public universities. Nonetheless, his
argument boils down to the belief that contemporary universities
have become amoral institutions and, therefore, cannot provide a
true liberal education7. As a solution he proposes that colleges
define “what religious framework, virtues, or shared values [they
can] use as the underlying foundation [of their education]8” and
build their education around those values.
*
Fried defines the Ivory Tower as “an industry wide culture that both
dominates and transcends today’s colleges. ‘Learning for Learning’s Sake’ is
the core value of the Ivory Tower.’” (page 9)

4
We believe that Fried makes a good point, though his
statement does not apply completely to Loyola. Being a Jesuit
institution (and a 142 year old one at that), Loyola has already
defined its values as the “Five Characteristics of a Jesuit
Education9”:
1) Commitment to excellence: Applying well-learned
lessons and skills to achieve new ideas, better
solutions and vital answers
2) Faith in God and the religious experience: Promoting
well-formed and strongly held beliefs in one's faith
tradition to deepen others' relationships with God
3) Service that promotes justice: Using learning and
leadership in openhanded and generous ways to
ensure freedom of inquiry, the pursuit of truth and
care for others
4) Values-based leadership: Ensuring a consistent focus
on personal integrity, ethical behavior in business and
in all professions, and the appropriate balance
between justice and fairness
5) Global awareness: Demonstrating an understanding
that the world's people and societies are interrelated
and interdependent
We are happy to admit that we cannot improve on 470
years of Jesuit tradition; however, we do believe that Loyola
University may need to re-orient itself to focus completely on the
student and less on the upper structures of the administration
that many students have come to feel dominated by. Thus, we
propose our own three values to achieve that goal:
1) Be a University- The term ‘university’ means “a
community of teachers and scholars10.” We believe
that Loyola University should live up to this
definition. We believe there should be teachers and

5
students and the purpose of the university should be
to gather together those two groups so the former can
impart knowledge to the latter. Such a community is
not out of reach.
2) Redefine Roles- We believe the only role of faculty is
to teach and the only role of the administration is to
keep the university in line with its mission. Any
variance from these roles risks disrupting the
“community of teachers and scholars.” We
acknowledge that some sacrifices to this strict school
of thought must be made to maintain the
contemporary institution, but we also believe that
such sacrifices should be limited.
3) Do Not Be Afraid- We believe that if the University is
serious about lowering the cost of education, and
keeping it low, it must be willing to make changes on
a grander scale than it is used to doing. Some changes
may be unpopular and hard to implement, but if
Loyola University is committed to providing
education “for those who wish to seek new knowledge
in the service of humanity…as members of a diverse
learning community that values freedom of inquiry,
the pursuit of truth and care for others,11” some
changes must be made. If institutional reform allows
even one more student to obtain an education who
otherwise would not, then that is a great victory.
“How much better it is to get wisdom than gold!
And to get understanding is to be chosen above
silver.”
– Proverbs 16:16

6
Overview
The remainder of the report will expound upon the values
described above. Section One will go into detail about
administrative reform and the proposals to lower tuition through
reform at the highest levels of the University. Section Two
discusses faculty reform and cost saving measures that can be
implemented within the faculty structure in order to save money.
Section Three is focused on transforming Loyola’s athletic
program into a cost saving, cost efficient program without
making major sacrifices. Section Four proposes plans and
measures to save money in the area of financial aid distribution.
The Conclusion contains our closing thoughts.
Please note that this report has always been focused on
lowering tuition- the reader will not find plans to lower room and
board rates, meal plan rates, student activity rates, or any tuition
other than undergraduate tuition; we excluded graduate student
tuition from our research.
As you read, remember the Five Characteristics of a
Jesuit Education: a commitment to excellence, faith in God and
the religious experience, service that promotes justice, values-
based leadership, and global awareness. These Characteristics
are the foundations of the University. Without these five
distinguishable values Loyola University would cease to be Jesuit
and would cease to provide the education for which it is
renowned. Thus, we believe these pillars will guide you to a
better, more complete understanding of Loyola University as an
institution of learning, or a “community of teachers and
scholars.”
We also encourage you to remember the three values we
have built this report on: being a university, redefining roles,
and not being afraid. The University may be built upon Five

7
Characteristics, but this report is built upon the three values.
Without the three values this report would lose its meaning and
would become nothing more than words on a page. It is
important that our three values are applied to our findings in
order for you, the reader, to gain our perspective on both the
purpose of education and the purpose of Loyola University
Chicago.
Before we get into the report itself, we want to briefly go
over its title. We chose The Path to Lower Tuition: Breaking the
Status Quo for one main reason: the only way to lower tuition is
to break the status quo. It is not possible to remain in the
framework of the status quo and expect the cost of education to
fall. This report will show how the cost of education can be
reduced if one works outside the scaffolding of the status quo.
Lastly, we want to use the introduction to express the
intent of this report. We want this report to serve as a model for
other universities and other college students; we hope they can
utilize our findings and tailor a plan for their own university as
we tried to do for ours. We are the first to admit that researching
and devising plans to lower tuition is not an easy task for
anyone- student, professor, or administrator. Thus, it is our hope
that this report and the proposals contained within it can be used
as inspiration, a source, or both- whatever works best for the
next person who takes that first step towards lower tuition.
Our goal for this report can really be summed up with one
honest sentence: we want to make college affordable.

8
Notes- Introduction
1
Hechinger, John, and Janet Lorin. "Tuition Jumps 8.3% Doubling
Inflation." Bloomberg. N.p., 25 Oct. 2011. Web. 02 July 2012.
<http://www.bloomberg.com/news/2011-10-26/tuition-jumps-8-3-
doubling-inflation-as-obama-plans-debt-relief.html>.
2
"Loyola Student Dispatch." Loyola Student Dispatch. Loyola Student
Dispatch, 30 Jan. 2012. Web. 02 July 2012.
<http://loyolastudentdispatch.com/2012/01/30/loyola-plans-2-75-
tution-increase-for-next-year/>.
3
United States of America. U.S. Department of Education. National
Center for Education Statistics, Higher Education General Information
Survey. National Center for Education Statistics. N.p., n.d. Web. 02
July 2012.
<http://nces.ed.gov/programs/digest/d11/tables/dt11_349.asp>.
4
Ibid.
5
Cauchon, Dennis. "Student Loans Outstanding Will Exceed $1
Trillion This Year." USA Today. N.p., 25 Oct. 2011. Web. 02 July
2012. <http://www.usatoday.com/money/perfi/college/story/2011-10-
19/student-loan-debt/50818676/1>.
6
Fried, Vance H. "Culture." Better/cheaper College: An Entrepreneur's
Guide to Rescuing the Undergraduate Eduacation Industry. [S.l.]: Ccap,
2010. N. pag. Print. Page 16
7
Fried believes and argues that a liberal education should “enable
graduates ‘to perform justly, skillfully, and magnanimously, all the
offices, both private and public.’” (pg. 47)
8
Fried, Vance H. "Culture." Better/cheaper College: An Entrepreneur's
Guide to Rescuing the Undergraduate Eduacation Industry. [S.l.]: Ccap,
2010. N. pag. Print. Page 46

9
9
"University Mission Statement." Loyola University Chicago. N.p.,
n.d. Web. 02 July 2012.
<http://www.luc.edu/mission/aboutus/mission_vision.shtml>.
10
"Universities." Encyclopædia Britannica. N.d. Google Books. Web.
02 July 2012.
<http://books.google.com/books?id=5vgGE8_CGOEC&pg=PA748&lp
g=PA748&dq=community+of+teachers+and+scholars+universitas+ma
gistrorum+et+scholarium&hl=en#v=onepage&q&f=false>.
11
"University Mission Statement." Loyola University Chicago. N.p.,
n.d. Web. 02 July 2012.
<http://www.luc.edu/mission/aboutus/mission_vision.shtml>.

11
Section One: The Administration
niversity administrations have grown substantially in
recent years, leading to higher tuition rates in order to pay
new administrative members and their staffs. The Center for
College Affordability and Productivity (CCAP) estimates that
“from 1997 to 2007, the proportion of full-time equivalent
employees in the categories ‘executive, administrative, and
managers’ and ‘other professionals’ rose from 22.6 percent to
26.1 percent, continuing a trend that begun still earlier.1” The
problem with this arises because most administrative members,
unlike faculty, do not teach students. They are non-instructional
members of the institution whose salary comes from tuition.
Instead, those in the administration run the University. They
keep the cogs turning smoothly so the faculty can teach and the
students can learn. This does not hold negative consequences for
the University in and of itself; however, as administrations have
grown the university system in general has become less learning-
oriented and more bureaucratic. For example, administrative
staff accounted for $63,103,712 of Loyola’s 2011 budget2. The
prior year, in 2010, it accounted for $60,337,263. In contrast, the
faculty is allotted $77,409,141. The difference between the two is
only 14 million dollars*.
The end result of this growth is higher tuition and fees, all
of which are paid for by the students. Loyola University has not
been immune from this trend.
Administrative Departments and Offices
In order to reverse the trend of University
bureaucratization, higher tuition, and higher fees, departments
*
More information on these statistics is contained in Appendix I.
U

12
that do not meet at least one of the following criteria should be
eliminated:
1) The promotion of the school’s educational mission.
2) The maintenance of the school’s fiscal affairs.
3) The provider of substantial student benefit.
When each of these criteria are distilled and viewed
together with the three values described in the introduction they
can be used as a guiding principle to effectively lower tuition by
eliminating ‘administrative bloat.’
The first criterion above and the first value previously
described go very much together. A ‘university,’ as it has been
noted, is a “community of teachers and scholars.” Its only
purpose, therefore, is to educate. Administrative functions are a
necessity for any university to properly run, however if an
administrative department or office does not expressly help
further the education of the students it should be eliminated,
unless of course it meets one of the other two criteria. A good
question to ask when considering this criterion is “can students
further their education through this office?” If the answer is
“no,” or if a “yes” answer has to be contorted to be justified, the
service in question should be eliminated.
The second criterion above is as equally important as the
first. It is important for the University to remain fiscally sound,
but that does not excuse fiscal operations from scrutiny and
possible modification to increase efficiency and lower cost. It is
therefore recommended that an audit be performed every fiscal
year of all the offices and departments that maintain fiscal
affairs. If duplicative and redundant entities are found, those
entities should be either condensed or eliminated.

13
Lastly, the third criterion is important because, like the
first, it focuses on the students. A university’s mission is to
educate but it is also important that students receive other
benefits where they can apply what they have learned (a school
newspaper is good example). It is “substantial student benefits”
like these that make offices, departments, or activities worth
retaining. Extracurricular activities such as newspapers are not
the only providers of substantial student benefits, however.
Loyola’s Office of Student Conduct & Conflict Resolution
(OSCCR) is valuable because it does exactly what it’s named to
do: provide resolution to infractions of University policy. The
third criterion can therefore be broken down into two more
guidelines:
a) Offices or departments where students can apply
what they have learned.
b) Offices or departments that substantially promote
well-being or enforce University policy.
If an office or department does not meet one these two sub-
criteria, along with the other two criteria, it should be eliminated.
In sum, we recommend a department-by-department
analysis according to our criteria with the appropriate action
taken based on the results of that analysis. This analysis can be
done by the audit committee (please see page 15).
Take, for example, Loyola’s Project Management Office.
Its stated mission is to “…deliver excellent services to enable
Loyola students, faculty and staff to effectively manage
projects.3” This Office does not promote the University’s
educational mission, nor does it manage, maintain, or otherwise
monitor the University’s fiscal affairs. Furthermore, this Office
does not meet either of the two sub-criteria of the third criterion.
Students cannot apply what they have learned nor does this

14
Office substantially promote well-being or enforce University
policy. Lastly, many of this Office’s objectives are already met by
entities like the Center for Tutoring & Academic Excellence*, the
Writing Center†, and the University Library System‡. Thus, the
Office of Project Management becomes a redundancy and should
be eliminated.
Administrative Positions
A major reason tuition rates are so high is that a portion
of the money generated goes towards paying administrators and
their staffs. Just as with administrations in general,
administrative staffs are not inherently negative positions; one
administrator can only do so much. However, as the Center for
College Affordability and Productivity (CCAP) states, based on a
report by Daniel Bennet4, “the growth of administrative
employees has outpaced that of faculty and instructors. If this
trend were to continue in the future, administrative employees
would outnumber instructors at 4-year colleges by 2014.5”
A growth in administrative positions brings with it a rise
in tuition rates. In order to ensure that the University runs as
efficiently as possible while at the same time reducing costs, and
therefore lowering tuition, it is recommended that Loyola replace
full-time minor administrative positions with either full-time or
part-time Loyola students. “Minor” positions would include
secretaries, clerks, front desk jobs, and other supportive roles
that can be filled by a student worker. Note that these positions
*
“Our mission at the Center for Tutoring and Academic Excellence is to
provide a series of collaborative learning services that will promote a student’s
active participation in their own academic success.”
(http://www.luc.edu/tutoring/Mission.shtml) Accessed on 7 July 2012
†
“At the Writing Center our main goal is to help you become a better writer.”
(http://www.luc.edu/writing/home/) Accessed on 7 July 2012
‡
(Table of Resources) http://libraries.luc.edu/help Accessed on 7 July 2012

15
will not be created. Rather, student workers will replace those in
current administrative support roles.
A system like this benefits both the students and the
University. Students can work at lower salaries, saving the
University, and other students, money. Furthermore, student
administrative employees can put their position on their resume
which can help them get a job and which bolsters the University’s
reputation.
A real world example of a system similar to this can be
found at Rhodes College. In 2008 they implemented a plan
similar to the one proposed here:
The Rhodes Student Associates Program creates on-
campus jobs but that’s where the similarity to a work-
study program ends. Rather than being supported by
federal money, the jobs are supported by the college…
Work is proposed and guided by professors or staff
members to ensure that it is professional-level and relates
directly to each student’s area of study or desired career.
Students must maintain at least a 2.75 GPA to
participate.6
It is estimated that the program saves Rhodes College $500,000
per year7.
The Chief Financial Officer (CFO)
The CFO is the one person who is closest to a university’s
finances; it is therefore recommended that fiscal oversight be
consolidated in Loyola’s CFO position.
Anyone with experience in any type of administration, be
it a government, a university, or a private business, knows that
the saying “too many cooks spoils the pot” is true when it comes

16
to bureaucracies. Thus, it is recommended that the CFO alone be
vested with the power to detect and eradicate inefficiencies in the
fiscal structure of the University. It is recommended that he be
allowed to streamline the fiscal system, increase efficiency, and
decrease costs through any means he desires. Any proposals the
CFO makes can be presented to the appropriate parties,
however, the CFO’s proposals may only be implemented by the
approval of the Board of Trustees.
Checks and balances are an important part of this system.
If the CFO is vested with too much power and not enough
restraint the University could be jeopardized and be put out of
business. Conversely, if there is too much restraint and not
enough power the CFO’s proposals could become limited and
progress could be stifled.
Lastly, under this system, the CFO must submit for
review his findings on the fiscal status of the University each
fiscal year to both the President and the Board of Trustees.
Administrative Expenditures
Along with salaries, administrative expenditures require
tuition money to finance. Thus, if expenditures rise, tuition rises
and vice versa. In order to save money and lower the cost of
tuition at Loyola University, it is recommended that cuts in
expenditures be instituted in the upper levels of the University.
Such offices would include the office of the President, Provost,
and Vice Presidential (VP) positions which are, in no particular
order, VP for Public Affairs, VP for Advancement, VP for Student
Development, VP for Finance, VP for Human Resources, VP for
Facilities, and VP for Information Services. In order to efficiently
institute the recommended cuts the following criteria have been
developed:

17
1) Elimination
2) Consolidation
3) Ending duplication
4) Streamlining
If money is being spent on items of little or no import it is
recommended that those expenditures be eliminated completely,
in accordance with the first criterion. However, if the service,
materials, or other type of expenditure is necessary but overused,
it should be retained but consolidated financially in order to save
money.
Eliminating duplication was previously demonstrated
with the example of the Office of Project Management and the
other services that render it redundant. Such redundant Offices
should be eliminated completely.
Streamlining services, departments, or offices is
important for saving money. Using again the example from
above, the Center for Tutoring & Academic Excellence, the
Writing Center, and the University’s Library System all offer
similar objectives, namely to help the student with his or her
studies (see footnotes). The former two services could be folded
into the Library System, thus streamlining several entities that
have similar objectives and saving money by reducing
expenditures and other redundancies.
Audit Committee
Committees composed of individuals knowledgeable in a
given area (in this case fiscal affairs of the University) are often
more effective at completing their objectives than a bureaucracy
working on the same thing. It would be prudent, then, of the
University to create an audit committee with the objective of
performing an audit of the entire University on a regular basis,

18
which we define as every two fiscal years. This committee would
investigate every office, program, and department in an effort to
detect inefficiencies, duplicative services, redundant services,
and obsolete services. The audit committee would then
recommend solutions to the problems it identifies. Given the fact
that reviews of the University would be conducted every two
fiscal years, the audit committee would not have to worry about
completing their report within the confines of a single fiscal year,
though it may be wise to do so.
Composition of the audit team would consist of no more
than 10 faculty and administration members. It is recommended
that the committee utilize the criteria and principles laid out in
this Section to guide the audit process. Finally, all
recommendations made by the audit committee would have to be
approved by the Board of Trustees to be implemented.
Conclusion
Rising tuition costs and growth in the number of
administrators is not the only reason tuition has risen in recent
years, but it is a substantial reason. Instead of the administration
acting as a monitor to “keep the cogs turning smoothly,” it has
become part of the reason that the “cogs” have slowed down in
the first place. Thus, reducing administrative bloat will make the
cogs turn smoothly again and the University will be a university.
One final note on these measures is that all the savings
gained by implementing these recommendations should go
directly toward lowering undergraduate tuition. No other
application of savings will be acceptable, at least initially.
Reducing administrative bureaucracy is just the first step
toward lower tuition and a more affordable college education at
Loyola University. The second step is to address the faculty.

19
Notes- Section One
1
Vedder, Richard, Andrew Gillen, Daniel Bennet, Matthew Denhart,
Jonathan Robe, Todd Holbrook, Peter Neiger, James Coleman, Jordan
Templeton, Jonathan Leirer, Luke Myers, Ryan Brady, and Michael
Malesick. 25 Ways to Reduce the Cost of College. The Center for
College Affordability and Productivity. N.p., 2010. Web. 06 July 2012.
<http://www.centerforcollegeaffordability.org/uploads/25_Ways_Ch06
.pdf>.
2
Loyola University Chicago Report of Operating Expenses Excluding
Scholarships Total Lakeside With Account Detail. 30 June 2011. Raw
data. Illinois, Chicago.
3
"Project Management Office." Loyola University Chicago. N.p., n.d.
Web. 07 July 2012.
<http://www.luc.edu/pmo/resources_pm_stmt.shtml>.
4
Daniel Bennett, “Trends in the Higher Education Labor Force:
Identifying Changes in Worker composition and Productivity,”
(Washington: Center for College Affordability and Productivity, 2009).
Web. 07 July 2012
5
Vedder, Richard, Andrew Gillen, Daniel Bennet, Matthew Denhart,
Jonathan Robe, Todd Holbrook, Peter Neiger, James Coleman, Jordan
Templeton, Jonathan Leirer, Luke Myers, Ryan Brady, and Michael
Malesick. 25 Ways to Reduce the Cost of College. The Center for
College Affordability and Productivity. N.p., 2010. Web. 06 July 2012.
<http://www.centerforcollegeaffordability.org/uploads/25_Ways_Ch06
.pdf>.
6
"Rhodes College Student Associates Earn While They Learn: College
Provides Funding for 100 Students Through Innovative Program."
Rhodes College. N.p., 21 July 2008. Web. 07 July 2012.
<http://www.rhodes.edu/13003.asp>. Accessed via the CCAP
7
Ibid.

21
Section Two: The Faculty
he faculty of any university serves a noble purpose: to pass
on knowledge from their generation to the next one. This
handing down of information from generation to generation is
what enables a society to become great and what allows for
unprecedented success for a multitude of people. However,
despite these good intentions, the faculty at most universities has
grown from its simple roots and has become more than a conduit
of knowledge. Faculty members now work on faculty committees,
produce papers on almost every subject, and some have near-
lifetime employment in the form of tenure, while others are
granted sabbatical. Like other institutions of higher education,
Loyola University has shifted the mission of the faculty from one
of just teaching to one more focused on involvement in the
University. The recommendations that follow attempt to reverse
this shift.
Note that for the purpose of this section “faculty” is
strictly defined as those people in the current system who are
engaged in teaching students. In 2011 figures, this group was
allocated $69,116,119 of the University’s budget1 (please see
Appendix I for more information on this statistic).
Teaching Loads
Teaching loads are a good way to evaluate the efficiency
and cost effectiveness of the faculty. Smaller teaching loads
should be evaluated for their cost effectiveness while larger loads
are generally more beneficial.
Currently at Loyola tenure and tenure-track professors
teach five courses per year2 while faculty under a one year
contract teach eight courses during the same time period3. In
order to increase efficiency and the cost effectiveness of the
T

22
faculty, it is recommended that the teaching loads of tenure and
tenure-track faculty be increased to either six or seven classes
per year while the loads of professors under one year contracts
remain the same. Increased teaching loads is cost efficient
because one professor can take on more classes, thus reducing
the demand for professors and saving money on salary
payments.
Determining whether a faculty member should take on
one extra class or two should be determined based on the
discipline of the professor and the courses that are already being
taught. Based on those two criteria an educated decision can be
made as to whether one class or two should be added to the
teaching load. Lastly, these increased loads would be a
requirement of all tenure and tenure-track professors.
Incentives
Incentives provide a good way for an employer (the
University) to increase the efficiency and productivity of its
employees (in this case, faculty). Thus, one step toward
increasing the efficiency and productivity of Loyola’s
professoriate is to establish an incentive system that is currently
non-existent.
It is recommended that such a system comprise of three
awards, tentatively called “Professors of the Year”, which would
be distributed to the three professors who score highest on their
evaluations- the same evaluations that are used under the
Contract system. First place would receive $6,000, second place
would receive $3,000, and third place would receive $1,500 in
prize money; the three winners would also share a dinner with
the President of the University, whoever it may be at the time.

23
What these incentives attempt to achieve is quality work
and competition among faculty members. The key is that
competition drives innovation. Innovation in an educational
environment often means better quality teaching and better
results for the students. An incentive system such as this will
help everyone involved improve themselves, which in turn
improves the University.
Friendly competition among the professoriate can
improve quality, efficiency, and, in the end, the University as a
whole.
Faculty Obligations
Many universities require faculty members to not only
conduct research as a condition to achieve tenure, but also
require ‘service,’ which can come in several forms. If a professor
does not fulfill the criteria set by the university, he or she will not
be eligible for a tenured position. Unfortunately, such criteria are
often burdensome and, in many cases, can distract the professor
by dividing his or her attention.
Like other universities, Loyola has several criteria that
faculty must complete in order to be considered for tenure. Along
with research, faculty members must be active in ‘service’
activities which “includes, but is not limited to, the following:
participating in the governance of the University at the
departmental, college, or university levels; contributing to
departmental projects and programs; mentoring faculty
colleagues; serving in leadership roles in professional
organizations or societies; serving as a journal editor or referee
of scholarly journals, presses, or proposals; and providing
professional expertise in public settings.4” Combined with
teaching, scholarship, and research obligations, a faculty
member who wants to be granted tenure can be spread thin.

24
In order to reverse this trend it is recommended that
those obligations be eliminated. This does not mean that faculty
committees, governance institutions, or other faculty leadership
opportunities will be cut. Instead, only the obligation that a
faculty member must participate will be eliminated. If a faculty
member feels comfortable devoting time to a service position,
they should do so not out of obligation, but out of a sense of duty.
Furthermore, by removing obligations, the focus of the
faculty is returned more directly to students and the passing on
of knowledge, instead of a focus on the fulfillment of criteria. A
university is, after all, a place where knowledge is transferred.
Obligations put onto the faculty distract from that mission.
Evaluations
Loyola already utilizes an evaluation system but the
process is different from department to department and the
results are never published. We recommend a streamlining of the
current system as follows:
a) Implementation of one evaluation system that is
University-wide and across all academic departments.
b) The evaluations would be completed online for all
courses.
c) The specifics of what is on the evaluation should be
determined by the University; however, the evaluation
should be simple. It should be easy to understand but not
time consuming- students have on average five courses
and they would be filling out evaluations for all of them.
d) All evaluations would be published online and would be
accessible to administrators, parents, and students.
An evaluation system like this increases transparency on
the part of the University and provides for more

25
accountability on the part of the professorate. Students
would refer to this site in order to choose the best quality
professors and professors would improve their teaching style
according to the evaluations. This system increases efficiency
and lowers cost without much cost itself.
Personnel
The first statistic in this chapter noted that $69.1 million
of the 2010-2011 University budget went towards the faculty*.
This number is, in fact, the second largest budget expenditure
trailing only financial aid.
To “cut and cap” these costs we recommend that the
University eliminate adjunct faculty members and most part-
time faculty members. Part-time faculty members are, on some
occasions, a necessity. If that is the case, they may be retained.
Nonetheless, a five percent reduction in faculty headcount
should be a target reduction. Note that the Lakeside campuses
have approximately 620 faculty5. A five percent reduction would
result in the elimination of 31 faculty with 589 faculty would
remaining. Such a reduction can mostly be achieved through the
elimination of adjuncts and part-time faculty members, coupled
with full time faculty members who decide to leave on their own.
Conclusion
Very few of the above recommendations will result in
direct, easy-to-spot savings for the University if they are taken by
themselves. Taken together, however, these recommendations
will have a twofold effect: a) the faculty will be more oriented to
the student and b) the faculty will become efficient to the point
that faculty bloat (to the extent it exists) will be eliminated. In
*
In the University’s budget, “salaries” include both administrative and faculty
salaries. Combined, these two items are the largest budgetary expenditure.

26
the end, these two effects will result in the University saving
money which will, in turn, lower tuition.
Now that the ‘cogs’ of the University- faculty and
administration- have been covered, we turn to athletics and its
fiscal impact on tuition.

27
Notes- Section Two
1
Loyola University Chicago Report of Operating Expenses Excluding
Scholarships; Lakeside, as of 6/30/2011. 30 June 2011. Raw data.
Loyola Unviersity Chicago, Chicago.
2
William Laird, private correspondence. Email to the authors.
3
Ibid.
4
College of Arts & Sciences Rank and Tenure Procedures and Criteria.
N.d. Raw data. Loyola Unviersity Chicago, Chicago.
Accessed on 1 August 2012.
5
John Pellisero, private correspondence. Email to the authors.

29
Section Three: Athletics
thletic programs at contemporary universities can
oftentimes rival professional sports franchises when it
comes to facilities, salaries, and talent level. For many students,
and even for people not associated with a given university,
attending athletic events is a good way to support the university
and the athletes. Athletics can be a net positive for universities- if
the program is fiscally sound.
Loyola’s own athletics program is in a particularly poor
spot. The program’s total operating expenses in 2011 was
$12,063,5271. The largest item out of the expenditures came from
Athletic Student Aid, which totaled $4,050,8452. Coaching
salaries was the second largest expense at $1,743,2873 and
administrative salaries were third totaling at $1,419,5664. During
the same time period (2011), the athletics program’s revenue was
$1,223,3555 leading to a deficit of $10,840,172. This deficit costs
each undergraduate student $1,188.22.
Such a deficit is not only unsustainable, it is
unacceptable. There are two options for athletics at Loyola going
into the future: fix the program or eliminate it.
We do not believe Loyola should be without an athletics
program; thus, we make the following recommendations that will
address and, we believe, fix the current situation.
Athletic Administration
Much like other administrative departments, such as
those discussed in Section One, the administration within the
athletic department has become too large to efficiently maintain.
It is therefore recommended that athletic personnel be reduced
by 5 percent.
A

30
The administration within the athletic department is not
large, per se, especially when it is compared to the
administration that works in the College of Arts and Sciences.
However, the athletics administration is large enough to merit a
reduction. The suggested reduction of five percent is based on
the size of the department and the savings a five percent
reduction will achieve. For example, anything more than 5
percent could actually hurt the department and anything less will
not result in significant savings. We believe, therefore, a five
percent reduction in athletic personnel is the most efficient way
to save money without hurting the department.
Oversight
Because of the current situation of the athletic
department, increased oversight is needed to put the program on
the right track to both fiscal and athletic success.
This oversight can be achieved by requiring the Athletics
Director to write and submit a monthly report to the President
and Board of Trustees on the status of the athletics program,
along with a general review of each individual sport and the
success or failures it is encountering. Based on the report and
review, the President and Board can decide what further action
should be taken to improve the program.
Greater accountability, and the possibility of
administrative action, should be an incentive for the Athletics
Department to spend their budget wisely.
Scholarships
The introduction to this section noted that the single
largest budget item in the athletics program is Athletic Student
Aid, which totals $4,050,845. This number must be cut and
capped through changes to the athletic scholarship process.

31
First, athletic scholarships must be redefined as merit
based scholarships, as opposed to the current system that
rewards pure athletic talent. These redefined scholarships would
be awarded based on the demonstration of great academic
achievement* and would be conferred upon recruitment. Thus,
these ‘athletic-merit’ scholarships would have the same
requirements as the current merit-based scholarships that apply
to non-athletes.
Our goal in redefining athletic scholarships is to shift the
focus back on academics while maintaining the credibility of the
athletics program. Loyola prides itself as being an intense
academic school. We believe that bringing athletic scholarships
into line with non-athletic merit based scholarships will bring the
athletics program into the academic fold.
Secondly, a five percent reduction in total scholarship
expenses, from $4,050,845 to $3,848,302, would result in
savings significant enough to apply towards lower tuition. In
other words, a five percent reduction is not large enough to be a
detriment to the scholarship program but is large enough to
result in a significant amount of savings. Athletic Student Aid is
an appropriate place to find these savings due to the size of the
aid being distributed. Furthermore, to prevent increases in costs,
total scholarship expenses should be capped at $3,848,302.
Chief Business Officer
There is currently no office of the Chief Business Officer
(CBO) within the Athletics Department at Loyola. We believe
that the position should be created in order for the Department’s
business side to be successful.
*
We chose not to define “great academic achievement,” as that would not be
appropriate for us to do; it is also outside the scope of this report.

32
In order for the office of the Chief Business Officer to be
created the Office of Internal Operations, which is currently
responsible for the business and finance aspects of the athletic
department, will have to be eliminated. Many of the current staff
members of the Internal Operations office can be retained and
work in the CBO office. Nonetheless, the office of Internal
Operations will be eliminated.
The Chief Business Officer will be vested with authority
equivalent to that of the Athletics Director, except the CBO’s
scope of operation is limited to the financial aspects of the
department.
The Office of the Chief Business Officer will be in control
of all fiscal issues that are pertinent to the athletic department.
For this arrangement to be effective, the Athletic Director must
go through the Chief Business Officer, and his Office, for any
financial dealings, such as spending or cutting money on (or to)
certain sports.
The CBO will furthermore have to report to the Chief
Financial Officer of the University and the Vice President for
Student Development on the fiscal status of the Athletics
Department, in keeping with the oversight provision described
above. It is recommended that such reports be filed twice per
fiscal year.
The Chief Business Officer should have a business,
financial, economic, or otherwise fiscally related background, for
several reasons. First, the CBO needs to know how to cultivate
revenues, reduce costs, and make a profit. A CBO with a fiscal
background should have the knowledge to design a system, or
work with the current system, in a way that will create profits for
the program. Secondly, the CBO will have to know what actions
to take to minimize losses and increase profit. He will accomplish

33
this by maintaining a check on the structure of the athletics
program through maximizing efficiency, streamlining processes
and services within the program, ending duplication within the
program, and consolidating offices within the program if need
be.
In a word, the Chief Business Officer’s primary goal is to
make a profit and minimize monetary losses as much as possible.
Profits in the athletic program cannot be made without the teams
winning games. It is in CBO’s best interest, then, to create a
business structure that does not impede the team’s ability to win.
The CBO has a responsibility to refrain from liberally eliminating
coaches and administrators. To do so would work contrary to his
interest of forming a successful athletic program and fiscal
structure. He instead has to pursue a path of responsible fiscal
decision making.
Integration
Integration within the Athletics Department would
operate differently than it would within the administration, as
described in the first section. For example, if a specific athletic
office and a specific University office share the same functions,
we recommend that the athletics office be eliminated and the
University office assume its functions. We offer several examples
to illustrate our point:
1) The Office of External Operations6 concerns itself
with marketing, ticketing, media relations, and
fundraising components for the athletics program. It
is recommended that this Office be integrated under
the Office of Vice President for Student Development.
Specifically, its duties should be assumed under the
University’s Office for Marketing and
Communication.

34
2) The Office of Communications7 oversees the media
relations efforts, including social media efforts, for all
15 of Loyola’s varsity sports. It is recommended that
this Office should also be consolidated under the
University’s Office for Marketing and
Communication.
3) The Office of Compliance and Student Athletic
Development8 concerns itself with compliancy of the
athletics program and a “diverse portfolio of student-
athlete concerns.” We recommend its consolidation
via two University departments. The compliance
component should be folded under the University’s
current compliance department. The duties of the
Student Athletic Development component should be
assumed by the University’s Office of the Vice
President for Student Development.
Ending duplicative offices and services ultimately saves
the University money, which in turn can lower tuition. There are
only a few examples shown here; however, it is recommended
that the Chief Business Officer conduct a thorough review of all
the offices and programs in the Athletics Department to
determine what can be integrated and where. It should be noted
that the quality of the departments should not suffer, even if that
means retaining a duplicative service that would otherwise be
done inefficiently if it was streamlined.
Conclusion
Athletics is an integral part of many contemporary
universities, and Loyola is no exception. However, when the
program fiscally suffers it can affect the University as a whole,
including the cost of education. We believe the recommendations
contained in this chapter provide a way for Loyola’s athletics
program to responsibly, efficiently, and prudently manage its

35
fiscal affairs. Creating a financially stable athletics program can
have a positive impact on both the teams and tuition.
We have now covered three of the largest aspects of the
University: administration, faculty, and athletics. The next
section, financial aid, analyzes its impact on the cost of education
at Loyola.

36
Notes- Section Three
1
Deloitte & Touche LLP. Loyola University Chicago Statement of
Revenues and Expenses of the Intercollegiate Athletics Program for the
Year Ended June 30, 2011 and Independent Accountants' Report on
Applying Agreed Upon Procedures. Rep. N.p.: n.p., n.d. Print.
2
Ibid.
3
Ibid.
4
Ibid.
5
Ibid.
6
"Loyola Athletics Department Directory." Loyola University Chicago
Official Athletic Site. N.p., n.d. Web. 06 Aug. 2012.
<http://www.loyolaramblers.com/staffdir/loyc-staffdir.html>.
7
Ibid.
8
Ibid.

37
Section Four: Financial Aid
inancial aid plays an integral role for many college students
today. No matter their economic background, many
students either receive scholarships or take out loans to pay for
their education. However, in recent years, the rising amount of
institutional financial aid being distributed has turned financial
aid into a double edged sword. At Loyola, financial aid is the
second largest budget expenditure, second only to University
salaries. Though financial aid may not currently be the largest
item on the budget, it is not a stretch to assume that it will
become the largest item in time, and sooner rather than later.
Universities follow a model that states “high tuition, high
discount.” In other words, universities set their sticker price at
high levels and give discounts from there in the form of financial
aid. Loyola is no different. We believe that this model must be
abandoned if the cost of education is ever expected to fall. It
should be replaced with a model that reduces the amount of
financial aid dispersed in the first place, which will lower tuition
as a result.
Trends
In order to best understand the current situation of
financial aid at Loyola, several important statistics should be
analyzed.
For fiscal year (FY) 2011 unfunded scholarships* on
Loyola’s Lakeside campus totaled $108,755,000. For FY 2012
that funding increased to $112,843,000, an increase of
$4,088,000. The unfunded scholarships for FY 2013 were
*
“Unfunded scholarships” are defined as financial aid that is funded through
money collected by tuition and distributed directly by the University with no
third party contributions.
F

38
increased again to $124,755,0001. In just three fiscal years
financial aid expenditures increased by a staggering
$16,000,000 in order to help offset the cost of tuition. Funding
the $16 million increase could itself be offset by gains in
enrollment as more people paying into the system will lower the
cost for everyone. However, Loyola actually lost five students
during that same time period (2011-2013)* meaning the
remaining students pay a higher rate.
But perhaps the most revealing statistic is the one that
shows individual financial aid contributions. To calculate this,
the total Lakeside financial aid budget was divided by the
number of undergraduate students enrolled for that respective
year. This yielded the “financial aid per student.” Assuming a
student was to pay the entire tuition rate (with no outside help)
this number would be how much an individual contributes to
financial aid out of their tuition:
2011: $11,920.96
2012: $12,455.07
2013: $13,682.27
These numbers just show the past three years, but the
trends of rising costs reach further into the past than that. For
example, Loyola’s undergraduate enrollment in 2003 was
approximately 13,000 students. Tuition was $18,000 and the
financial aid budget was approximately $51 million. In 2012, less
than a decade later, undergraduate enrollment is approximately
16,000 students, the cost of education is approximately $33,000,
and the financial aid budget is more than $120 million and
*
2011 Undergraduate Enrollment: 9,123
Source: Fiscal Year 2013 Budget Presentation & Supplemental Material; FY
2013 Budget, FY 2012 Forecast University Academic; page 13 of 21

39
continuing to rise2. In less than a decade, tuition has almost
doubled and the financial aid budget has almost tripled, while
enrollment has not risen nearly enough to offset the cost of
financial aid.
Despite this, the University does list several reasons for
the increases in the financial aid budget:
 “…to adjust for the current economic situation,
help ensure enrollment is at or near capacity, and
to allow for the recruiting of students with a
higher academic profile.”3
 “…this unfavorable variance [increase in financial
aid] is principally related to additional unfunded
scholarships to recruit and retain students with
exceptional academic backgrounds.”4
 “…due to the current financial challenges and
increased cost relating to the recruitment of more
academically gifted students.”5
To put these points another way, Loyola has been
increasing its financial aid budget to keep enrollment up, to deal
with the current economic conditions, and to recruit
academically gifted students.
In addition to the three reasons Loyola lists for increasing
the financial aid budget, many universities, Loyola included, are
heavy users of financial aid for an additional three reasons:
1) It maximizes revenue- The university can figure out
how much a student is willing to pay, then charge him
that much. If a student can pay the full sticker price of
the school, he is charged that price. If not, deductions
in tuition are taken out through financial aid and the
student pays the difference.

40
2) It ‘buys’ students- Financial aid is an important tool
to recruit and retain academically gifted students. The
more a student receives in aid, the more likely he is to
attend the university. Furthermore, the more
academically gifted students a university has enrolled,
the more prestigious its reputation becomes.
3) It can sell a university- Universities many times claim
(albeit perhaps implicitly or not ‘officially’) to be
prestigious institutions precisely because of their high
tuition rate. Thus, when a student is offered large
financial aid prior to enrollment he is more likely to
take the aid offers into consideration when deciding
on a university to attend. If he chooses the university
that offered him a large financial aid package the
‘selling point’ worked for the university6.
As previously noted, universities generally follow the
“high tuition, high discount” model when determining tuition
and financial aid packages. But as these statistics show, this
model has led only to unsustainable costs that are completely out
of sync with the consumer price index7. The “high/high” model
has driven the cost of education to new extremes that less and
less students are able to meet.
If action is not taken now to reverse the course that
universities are currently on, there will come a time when a
certain economic group of students will not be able to afford a
college education because of the “high tuition, high discount”
model. These students will be disqualified from receiving
financial aid because of their level of income yet they will not
receive enough income to pay for the sticker price of the
university. These students are middle class students. This model
is leading to that point, and it will come sooner rather than later.
This model has failed.

41
Projections
Running a business requires looking to the future. Good
and efficient business models will show good projections.
Conversely, inept and inefficient models will show trouble on the
horizon. Loyola has created its own projections that show its
fiscal future five and ten years from now. The results of that
projection point to a deficiency in the University’s current
business model: assuming that all variables are held constant
the University will be in crisis mode in ten years. The projection
was created keeping the following variables constant:
 Unfunded scholarships would increase at the rate of
growth.
 Discount rates would increase by approximately 1.0%
percent per fiscal year.
 Tuition would increase at 2.5% per fiscal year.
 Enrollment would be held at practical capacity*.
 Salaries would increase at the rate of inflation.
The University has been running a surplus for at least the
past eight years but the surplus trend is down. For example, the
University’s surplus in FY 2011 was $51 million8. In FY 2012 the
University ran less of a surplus at $37.1 million9. The trend of
decreasing surpluses is projected to continue with FY 2017
seeing a $19 million surplus10 and FY 2022 seeing a $10 million
surplus11.
Surpluses are good for the University as it allows the
University to both balance its budgets and pay down its debt.
However, a decrease in the amount of surplus means that it is
very possible that by 2023 Loyola could break even or run a
*
“Practical capacity” is defined as the amount of students the campus can
sustain without further capital projects.

42
deficit. Running a deficit would lead to the University to incur
more debt in order to finance its operation, but the University
currently has over $500 million in debt12; to add to that debt
would push an already unsustainable system beyond its outer
limits. Incurring more debt is an important issue facing the
University but it is not the worst issue the University will be
confronted with in the next five to ten years.
University revenues mostly come from tuition. Certain
expenditures of the University, such as financial aid, salaries,
fringe benefits, and non-salary expenses, are funded solely by
tuition. For the purpose of this report we call this set of
expenditures Group T; Group T is supported solely through
tuition. There are other expenses outside of Group T but they are
not included here because those expenses are paid for by means
other than tuition.
In FY 2012 the difference between Group T and tuition
was $8.5 million. In other words, there was an $8.5 million
surplus because tuition raised more revenue than was spent on
tuition-supported expenditures. In FY 2013 Group T and tuition
will break even and the $8.5 million surplus that was available in
FY 2012 will have disappeared. In FY 2014 Group T will take up
$7.5 million more than tuition will bring in. To make up for this
deficit the University will utilize reserves that will allow it to
make up the difference. However, in FY 2017 University reserves
will be consumed entirely in order to fully cover Group T. Also by
FY 2017 there will be a $16 million deficit between Group T and
tuition. Thus, the $16 million that will be needed to fund Group
T will come out of the reserves. In FY 2022 $35.1 million will be
needed to cover the deficit. Please see Appendix I for detail on
the calculations used here.
The University’s reserves and surpluses are important
because they are used for the Internal Bank, capital projects, and

43
endowment funds. The Internal Bank was the result of post-FY
2003 fiscal policies that help to ensure that the University will be
able to make payments on its debt. If the reserves are erased the
University will have trouble funding the Internal Bank and debt
repayment.
In five years (FY 2017) the University will be in serious
trouble when Group T consumes the University’s reserves. By FY
2022 the University will be in grave trouble with high debt,
dwindling reserves, a smaller surplus than any year before, and
by FY 2023 deficit spending may become a realistic possibility.
This trouble has its genesis in FY 2014 when Group T requires
more funding than tuition brings in.
The main cost driver behind these long-term issues is
financial aid. In FY 2013 the financial aid discount rate was
39.2% but by 2022 it will be 50.6%. Financial aid is the fastest
growing section within Group T. Unfunded scholarships in FY
2012 cost $115 million to finance. In FY 2013, when Group T
breaks even, they will cost $130.1 million. In 2017, when Group T
consumes all reserves, they will cost $162 million. In 2022
unfunded scholarships will cost the University $200.7 million.
Conclusion
The University projects, while keeping all other variables
constant, that increasing tuition at a 2.5% rate will not be
successful in preventing the looming fiscal crisis. There are then
two ways the University can proceed: it can increase tuition at a
rate higher than 2.5% or it can maintain a 2.5% rate of increase
while also cutting expenditures in other areas like financial aid.
This report takes the path of scaling back financial aid
and other expenditures, such as salaries, which are the second
largest section within Group T. This report puts the University

44
on a path of fiscal sustainability while simultaneously lowering
tuition.
Solutions
Solutions to the dilemmas faced in the current financial
aid situation may not be easy or popular to implement, but we
believe the following recommendations will put Loyola’s
financial aid program on course for fiscal success and
sustainability.
Endowment
Loyola’s endowment contains $388.713 million as of June,
2011. Out of that $388.7 million the University spends
approximately four percent, or $15,548,000, per year14.
It is recommended that Loyola use an additional two
percent, or $7,774,000, of its endowment solely to fund financial
aid, bringing total endowment expenditures to approximately
$23,322,000 per fiscal year. $7.7 million that does not come
directly from tuition subsidies is $7.7 million that the students
are saving.
It should be noted that the University’s endowment is not
a zero-sum game. In other words, the endowment is not a
declining balance that cannot be added to. In many ways, the
endowment acts as a bank account that can be accessed to
deposit money and withdraw money from. Our primary focus in
this section is to withdraw money to fund financial aid; however,
it is important for the University to also deposit money in the
endowment through fundraisers (such as the annual
Phoneathon), block donations from individuals, and money from
revenue sources, among other things. A healthy endowment
makes for a healthy university, especially if its funds are used
correctly.

45
Cut and Cap
The current financial aid budget for the Lakeside campus
is $124,755,000, as we noted at the beginning of this section. In
order for the financial aid program, and the University as a
whole, to be put on the path to fiscal success, the financial aid
budget should be cut by ten percent, to be reduced to
$112,279,500, and capped at that number. To again put this in
perspective the recommended cuts we are less than the three
year, $16 million financial aid increase that was previously
discussed. The proposed reductions total $12,475,500.
Cutting and capping the financial aid budget is a
necessity given the current situation and cost trends. Cutting and
capping the budget will turn the financial aid program from an
overly generous one to a program that is more prudent, reserved,
and modest. It will be forced to distribute its money efficiently,
effectively, and to those students who need it the most. In other
words, cutting and capping the budget will reorient the focus of
the financial aid office toward a mission that will help the most
amount of people in the most efficient ways possible. The money
saved through cutting and capping must be applied to lowering
undergraduate tuition.
Limits to Scholarships- Need-Based Aid
The current average for students who receive need-based
aid is $19,71115 per year from the financial aid program at Loyola,
meaning that some students will receive more than $19,711 and
some will receive less.
It is recommended that a limit be set on the amount of
need-based aid a single student can receive. We believe that the
maximum amount of need-based aid received by one student be
$20,000 per year, instead of $19,711 being the average amount

46
received. The money saved by imposing these limits must be
applied to lowering undergraduate tuition.
Limits to Scholarships- Merit-Based Aid
The average Loyola student who receives merit-based
financial aid receives $10,87216 per year. While academically
gifted students should be rewarded for their talent the University
should not continue to confer immense scholarships upon these
students in an effort to retain them from year to year.
It is recommended that a modest reduction in the amount
of merit-based scholarships be conferred to those students who
qualify for them. It is recommended that the maximum amount
of merit-based aid received by one student be $11,000 per year,
thus making the average amount of aid received lower. The
money saved here must be applied to lowering undergraduate
tuition.
Advertising
Many contemporary universities use the amount of
financial aid they give out as a selling point to prospective
students; Loyola University is no different.
We recommend that Loyola change this paradigm and
advertise low tuition, assuming our recommendations are
implemented, instead of advertising high amounts of financial
aid.
This approach holds the main purpose of keeping the
University accountable. Advertising low tuition compels the
University to maintain that low tuition. Students and parents will
easily be able to detect any discrepancies between the advertised
tuition and the actual tuition. If discrepancies arise the
University would lose credibility and could lose students, both

47
prospective and currently enrolled students. It is therefore in the
best interest of the University to maintain a low tuition if it
advertises one.
Eradicating Inefficiencies
The previous sections have discussed the processes by
which inefficiencies and duplicative services can be dealt with.
The first section of this report lists four criteria that can also be
applied here in order to make the financial aid program as
efficient as possible. The criteria are:
1) Elimination
2) Consolidation
3) Ending duplication
4) Streamlining
It is recommended that the University conduct a
thorough review of the Financial Aid Office and take action
appropriately.
Conclusion
The most important concept to remember from this
section is not necessarily any of the recommendations, but rather
the fact that the current “high tuition, high discount” model has
led to increasingly higher costs of education and is quickly
becoming unsustainable. The “high/high” model has never
actually lowered costs but has only increased them over time.
The only way to effectively reverse the course charted by
the “high/high” model is to abandon it and do the opposite of it
which is, namely, to reduce budget expenditures. Spending and
maintaining is certainly easier than restraint and cutting, but if
tuition is ever expected to fall this is the path we must take.

48
In the Introduction we discussed the three values we
adhered to while writing this report. The third value was Do Not
Be Afraid and was defined as such:
We believe that if the University is serious about
lowering the cost of education, and keeping it low, it
must be willing to make changes on a grander scale
than it is used to doing. Some changes may be
unpopular and hard to implement, but if Loyola
University is committed to providing education “for
those who wish to seek new knowledge in the service
of humanity…as members of a diverse learning
community that values freedom of inquiry, the
pursuit of truth and care for others,” some changes
must be made. If institutional reform allows even
one more student to obtain an education who
otherwise would not, then that is a great victory.
This value is especially true here, in this time and under
these circumstances.
The path outlined in this section is the path that must be
taken, lest Loyola continues on its current route and slips further
and further away from the student.

49
Notes- Section Four
1
Fiscal Year 2013 Budget Presentation & Supplemental Material. N.d.
Raw data. Illinois, Chicago. Page 9 of 26.
2
AJCU Seminar for Leadership in Higher Education-Finance Track II;
Loyola University Chicago Case Study Financial Policies and Practices
Instrumental in Providing Financial Strength to Support Our Mission.
23 June 2011. Raw data. N.p. Pages 10, 11, and 12.
3
Fiscal Year 2013 Budget Presentation & Supplemental Material. Raw
data. Illinois, Chicago. Page 5 of 21.
4
5
6
Fried, Vance. "Financial Aid Reform." Message to the authors. 26
June 2012. E-mail.
7
Justin Daffron, S.J., private correspondence. 16 August 2012.
8
Fiscal Year 2013 Budget Presentation & Supplemental Material. 1
June 2012. Raw data. Loyola Unviersity Chicago, Chicago.
9
Ten Year Financial Forecast FY 2012 Through FY 2022 Lakeside
Campuses. June 2012. Raw data. Loyola Unviersity Chicago, Chicago.
Page 7 of 15.
10
Ibid.
11
Ibid.
12
William Laird, private correspondence. Email to the authors.
13
Justin Daffron, S.J., private correspondence. 16 August 2012.

50
14
15
"Loyola University Chicago." The College Board. N.p., n.d. Web. 24
Aug. 2012. <https://bigfuture.collegeboard.org/college-university-
search/loyola-university-chicago>.
16
Ibid.

51
Conclusion: A Second Renaissance
ow that we’ve covered the major areas that contribute to
high tuition- administration, faculty, athletics, and
financial aid- we come to the conclusion. As we noted in the
introduction, we want to use the conclusion as a place to share
our final thoughts.
One area not covered in this report is the area of revenue
streams. Of course, the primary source for University revenue is
tuition. However, if the University has a diversified portfolio of
additional revenue sources, it (the University) can decrease its
dependence on tuition. In other words, the University should
seek to add revenue from other sources in order to depend less
on tuition with the ultimate goal of lowering the cost of
education.
There are at least three revenue streams the University
could invest in that will create revenue significant enough to
lower tuition. Due to insufficient literature on the subject, and
therefore our own limited knowledge on these areas, we decided
not to write at length about any of these streams. Instead, we list
them here that perhaps in the future they can be developed and
implemented. The three revenue streams we recommend are:
1) An increase and emphasis on adult based education
programs (both degree-based and continuing education)
in various suburbs in the Chicago market area.
2) Establishment of a more robust online presence in
graduate and professional programs.
3) Investment in new programs, such as in an engineering
major. We believe the University should consider
“endowed programs” (programs sponsored through
private funds, like donations) and partnerships with
private companies to sponsor a program. For example,
N

52
soliciting The Boeing Company to help fund a new
engineering program could help the University get such a
program started and with less reliance on tuition money.
Although we did not have the resources available to research
these subjects in depth, we nonetheless believe that a brief
mention should be made in this report as these are additional
ways to reduce tuition.
Our last point regarding the revenue streams is that they
should not be used to raise or even stabilize the cost of education
at Loyola. If these options are implemented we strongly urge the
University to put as much of the revenue as feasible towards
reducing the rate of tuition.
⃰ ⃰ ⃰
In the introduction we listed the three values we wrote this
report around. We want to use this space to reiterate them:
1) Be a University- The term ‘university’ means “a
community of teachers and scholars.” We believe that
Loyola University should live up to this definition. We
believe there should be teachers and students and the
purpose of the university should be to gather together
those two groups so the former can impart knowledge to
the latter. Such a community is not out of reach.
2) Redefine Roles- We believe the only role of faculty is to
teach and the only role of the administration is to keep
the university in line with its mission. Any variance from
these roles risks disrupting the “community of teachers
and scholars.” We acknowledge that some sacrifices to
this strict school of thought must be made to maintain
the contemporary institution, but we also believe that
such sacrifices should be limited.

53
3) Do Not Be Afraid- We believe that if the University is
serious about lowering the cost of education, and keeping
it low, it must be willing to make changes on a grander
scale than it is used to. Some changes may be unpopular
and hard to implement, but if Loyola University is
committed to providing education “for those who wish to
seek new knowledge in the service of humanity…as
members of a diverse learning community that values
freedom of inquiry, the pursuit of truth and care for
others,” some changes must be made. If institutional
reform allows even one more student to obtain an
education who otherwise wouldn’t, that is a great victory.
We believe these values can and should be used as guiding
principles when restructuring the current system. They are of the
utmost importance and need to be taken seriously if they are to
have an impact.
We have worked on this report for eight months, thoroughly
researching options that will lower tuition and compiling them
into this report. It is our sincere belief that the recommendations
listed in this report can lower tuition if they are implemented in
full. We have very strong desires, and incentives, to lower tuition
at Loyola University (we are students, after all).
This report is a clarion call for those who have the authority
to lower tuition. This is our message and our warning to them. If
action is not taken now to address the rising cost of higher
education the entire structure of higher education will be put in
jeopardy.
As the title of this report suggests, the status quo must be
broken. The status quo is old, worn, and has outlived its use.
What has the status quo done for higher education? It has done

54
nothing but harm. We demonstrated throughout this report its
effects: bloat, cost, and fiscal unsustainability.
We in this time are in a unique position that does not very
often present itself. We have the opportunity to fundamentally
transform higher education. Now is the time to reinvent it, to
innovate, and to provide solutions for the challenges facing us.
The status quo must be dethroned and replaced in a second
Renaissance.
The problems facing us are large and will be hard, even
painful, to fix. But we control our fate, not our problems. It is up
to us to make the tough decisions and the hard calls. We should
not shrink away from the obstacles we are up against, but
embrace them. Now is the time for action, and it is ours for the
taking.

57
Appendix I
References are listed in the order they appeared in the main
text.
Faculty
The $69,116,119 figure was calculated using figures from the
“Report of Operating Expenses Excluding Scholarships Total Lakeside
with Account Detail”. The item numbers 5010, 5011, 5020, 5021, 5025,
and 5026 under the section “Salary/Faculty” were added together as
follows to yield the $69 million figure:
Item Number Revised Annual Budget (in
millions of dollars)
5010 TENURE TRACK FACULTY
SAL
49,602,716.00
5011 TENURE TRACK FT
FACULTY NON-FB
121,465.00
5020 NONTENURE TRACK FT
FACULTY SAL
10,971,972.00
5021 NONTENURE TRACK FT
FAC NON-FB
334,296.00
5025 NONTENURE TRACK PT
FACULTY SAL
6,968,831.00
5026 NONTENURE TRACK PT
FAC SUM/INT SESS
1,115,839.00
This figure was used for our faculty section because of its
simplicity and relevancy. The figure the “Report of Operating Expenses”
gives for the faculty is $77,409,141. This figure is larger than our own
calculation because it includes faculty who have roles other than
teaching, such as administrators. We believe that for our faculty section
we should address only those faculty members who teach, hence the
use of our own calculated figure.

59
Appendix II
The purpose of this outline is to condense and simplify all the
information detailed in the previous sections. Statistics play a large role
in this report. This Appendix gathers the statistics and main points into
one place for easy access.
If one would like more information on anything in this
summary, they should refer to the appropriate section of the report for
more information.
References are listed in the order they appeared in the main
text.
The Administration:
 2010 Budget Administrative Staff Expenses: $60,337,263
 2011 Budget Administrative Staff Expenses: $63,103,712
 Administrative Departments and Offices:
o Departments that do not meet at least one of the
following criteria should be eliminated:
 The promotion of the school’s education
mission.
 The maintenance of the school’s fiscal affairs.
 The provider of substantial student benefit,
which can be defined as:
 Offices or departments where students
can apply what they’ve learned.
 Offices or departments that
substantially promote well-being or
enforce University policy.
o In sum, we recommend a department-by-department
analysis according to our criteria with the appropriate
action taken based on the results of that analysis, done
by the audit committee.
 Administrative Positions:
o The number of administrative employees is on a steep
rise.

60
o Recommendation: Loyola replace full-time minor
administrative positions with either full-time or part-
time Loyola students.
 The Chief Financial Officer:
o Recommendation: Fiscal oversight consolidated in
Loyola’s Chief Financial Officer (CFO) position. CFO
alone should be vested with the power to detect and
eradicate inefficiencies, streamline the fiscal system,
increase efficiency, and decrease costs.
o CFO proposals can be approved through approval of
the Board of Trustees.
o Recommendation: CFO submit for review his findings
on the fiscal status of the University each fiscal year to
both the President and the Board of Trustees.
 The Audit Committee:
o Recommendation: The University establish a
committee with the objective of performing an audit of
the entire University on a regular basis, defined as
every two fiscal years.
o This committee would investigate every office,
program, and department in an effort to detect
inefficiencies, duplicative services, redundant services,
and obsolete services. The audit committee would then
recommend solutions to the problems it identifies
 Administrative Expenditures:
o Recommendation: Cuts in expenditures be instituted in
the upper levels of the University such as the office of
the President, the Provost, and all Vice Presidential
positions.
o The following criteria should be followed strictly in
order to institute the cuts:
 Elimination
 Consolidation
 Ending duplication
 Streamlining

61
The Faculty:
 For the purpose of this section “faculty” is strictly defined as
those people in the current system who are engaged in
teaching students.
o “Faculty” allotted in 2011: $69,116,119
 Teaching Loads
o Recall that tenure and tenure-track professors teach
five classes a year while those professors hired under
one year contracts teach eight courses a year.
o Recommendation: Increase teaching load on tenure
and tenure-track professors to six or seven classes a
year.
 Incentive system: Purpose is to increase efficiency and
productivity of employees.
o Establish “Professors of the Year” award:
 Awards distributed to the three professors
who score highest on their evaluations.
 First place receives $6,000, second place
receives $3,000, and third place receives
$1,500.
 All three winners share a dinner with the
president of the University.
 Faculty service obligations are eliminated. A professor can
conduct service on his own behalf.
 New evaluation system is implemented with the following
criteria:
o Implementation of one evaluation system that is
University-wide
o The evaluations would be completed online for all
courses.
o The evaluation should be simple, easy to understand,
and not time consuming.
o All evaluations would be published online and would
be accessible to administrators, parents, and students.
 Personnel:

62
o Recall that $69.1 million in 2010-2011 went towards
faculty.
o These costs must be “cut and capped”.
o Recommendations:
 Eliminate adjunct faculty members.
 Eliminate most part-time faculty members.
 5 percent reduction in faculty headcount.
The Athletics Program:
 Total operating expenses in 2011: $12,063,527
 Total revenue produced in 2011: $1,223,355
 2011 Deficit: $10,840,172
o Deficit per undergraduate student: $1,188.22
 The Athletic Administration:
o Total administrative salaries in 2011: $1,419,566
o Recommendation: 5 percent reduction in personnel
headcount.
 Oversight:
o Recommendation: The Athletics Director must write
and submit a monthly report to the President and the
Board of Trustees.
 Scholarships:
o Athletic Student Aid in 2011: $4,050,845
o Recommendations:
 Athletic Student Aid must be “cut and capped”.
 Redefine athletic scholarships to “athletic-
merit” scholarships.
 “Athletic-merit” scholarships would
have requirements as current merit-
based scholarships.
 5 percent reduction in total scholarship
expenses; from $4,050,845 to $3,848,302.
 Establishment of the Chief Business Officer:
o Eliminate current office of Internal Operations.
o Purpose of Chief Business Officer (CBO) is to control
all fiscal aspects of the athletics program, create a

63
profit, and minimize monetary losses as much as
possible.
o CBO authority will be equivalent to that of the Athletics
Director, but jurisdiction limited to the fiscal aspects of
the Athletics Department.
o CBO will report to the CFO of the University and the
Vice President for Student Development.
 Integration: If a specific athletic office and a specific University
office share the same functions, the athletics office should be
eliminated and the University office assumes its functions.
Financial Aid:
 Total Lakeside campus Financial Aid 2011: $108,755,000
o Financial aid per student: $11,920.96
 2003 statistics:
o Enrollment approximately 13,000 students
o Tuition approximately $18,000
o Financial Aid Budget approximately $51 million
 2012 statistics:
o Enrollment approximately 16,000 students
o Tuition approximately $33,000
o Financial Aid Budget in excess of $120 million
 Three reasons why contemporary universities like Loyola are
heavy users of institutional financial aid:
o 1) Maximization of revenue
o 2) “Buying,” recruiting, and retaining students
o 3) Sells the university- high tuition can makes a
university look more prestigious, but a university can
still recruit students via offers of large scholarships
 Projections:
o Surpluses have consistently been down:
 FY 2011: $51 million surplus

64
 FY 2012: $37.1 million surplus
o Group T expenditures will harm the University if
nothing is changed.
 In FY 2013 Group T expenditures will break
even with the amount of revenue raised
through tuition.
 In FY 2014 Group T will require $7.5 million
more than tuition can provide for.
 By FY 2017 Group T will have consumed all of
the University’s reserves.
 In FY 2022 Group T will require $35.1 to be
fully funded.
o Financial aid is the main cost driver in this scenario.
 The discount rate in FY 2013 is 39.2%.
 The discount rate in FY 2022 will be 50.6%.
 Unfunded scholarships in FY 2012 cost $115
million.
 Unfunded scholarships in FY 2017 will cost
$162 million.
 Unfunded scholarships in FY 2022 will cost
$200.7 million.
o Raising tuition at a 2.5% rate will not be enough to
reverse the trends.
 Recommendations:
o Spend 2% more of the endowment solely to contribute
to financial aid; $7,774,000 less would be needed from
tuition.
 Endowment must be maintained and grown as
well.
o Cut financial aid budget ($124,755,000) by 10% down
to $112,279,500.
o Cap financial aid budget at said number
($112,279,500).
o Establish limits to need-based aid: $20,000 maximum
to one student.

65
o Establish limits to merit-based aid: $11,000 maximum
to one student.
o Change paradigm from advertising high amounts of
scholarship to advertising low tuition rate (assuming
recommendations implemented).
o Eradicate inefficiencies in the financial aid system. It is
recommended that the University conduct a thorough
review of the financial aid system and take action
appropriately.

67
Acknowledgements
This report took us eight months to write and we definitely
could not have done it all ourselves.
We want to thank first and foremost Mr. William Laird, the
Chief Financial Officer at Loyola. He was very welcoming and open to
this report, never doubting and always encouraging us. He gave us
much of the information we needed to make this report a reality.
We also thank Father Michael Garanzini, S.J., who guided us in
the right direction when we were writing this report. He was very
helpful despite the workload that comes with being the President of the
University.
Our thanks also extend to other administrators who helped us
along the way, especially Thomas Hickey, Edward Moore, and Father
Justin Daffron, S.J. All three of them were very receptive to us and
helped us as much as they could.
Two faculty members provided us with their much appreciated
feedback on this report: Professors Robert Mayer and John Frendreis,
both of the Political Science Department. They were enthusiastic about
previewing this report and offered us a very unique insight that we
couldn’t have gotten from anyone else. Their contributions to this
report are very much appreciated.
We wrote this report for the students, and thus their input was
invaluable to have before we published this report. We thank those
students who helped us by making time in their schedules to provide us
with their feedback and insight. Specifically, we thank Sean Vera, Emily
Edkins, Hayley Stuber, Stephanie Romeo, Emilio Morrone, and Brian
Frank. We further thank Gabriel Lynch who designed and formatted
the cover of this book.
Last but not least we extend our thanks to Professor Vance
Fried, who teaches at Oklahoma State University. We took inspiration
from his book Better/Cheaper College and were fortunate to
communicate with him personally on several occasions. His faith in

68
entrepreneurs and the revitalization of American higher education was
encouraging to us at many steps along the way of this report.

71
About the Authors
Danish Murtaza is currently a student at Loyola
University Chicago expecting to graduate in the spring of 2015.
He is double majoring in Molecular Biology and Political Science.
Both the medical field and politics/public policy interest him. He
chose to pursue this project because he believes that the students
of Loyola have had enough of rising tuition and believes that
there is a way to reverse the trend of rising tuition. Danish lives
in the northern suburbs of Chicago though he is originally from
the Windy City.
Dominic Lynch is an undergraduate at Loyola
University Chicago and is expecting to graduate in the spring of
2015. He is majoring in Political Science with a focus on law
school in the future. He was inspired to work on this report
because he experienced first-hand the effects of expensive higher
education. Dominic lives in the western suburbs of Chicago.

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