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>.

10

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.

20

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.

28

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

2012 Undergraduate Enrollment: 9,060

2013 Undergraduate Enrollment: 9,118

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 Fiscal Year 2013 Budget Presentation & Supplemental Material. Raw

data. Illinois, Chicago. Page 6 of 21.

5 Fiscal Year 2013 Budget Presentation & Supplemental Material. Raw

data. Illinois, Chicago. Page 4 of 26.

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

Fiscal Year 2013 Budget Presentation & Supplemental Material. Raw

data. Illinois, Chicago. Page 5 of 21.

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.

55

56

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.

58

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

Total Lakeside campus Financial Aid 2012: $112,843,000

o Financial aid per student: $12,455.07

Total Lakeside campus Financial Aid 2013: $124,755,000

o Financial aid per student: $13,682.27

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

FY 2017: $19 million surplus

FY 2022: $10 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.

66

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.

69

70

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.