This incurs the wrath of the guards and pretty much sets your fellow mages up for NPC-related slaughter (not the Harry Potter version).

Once you have gained access to the Arcane University you can harvest an unlimited supply of enchanted daggers. The NPC mages all carry a randomly enchanted dagger. Since the mages at the University level-up with you, the higher your level, the higher the quality of the dagger and the stronger the enchantment.At level 2 the NPC mages will have an iron dagger and around level 6 they will start carrying dwarven daggers. Since you may not steal or kill your fellow mages you have to trick the gaurds outside of the gates to assist you. Simply walk up to any of the guards and attack them. When the guards ask you to surrender select "resist arrest".

There will be two guards outside, so you need to make sure to get both of them to follow you. Once you have them in tow, run into the academy and wait for your fellow mages to assist you in killing the guards. As the battles go, the gaurds will usually win and kill all of the mages. If this is the case, you need to finish the guards off yourself. Afterwards, simply loot the bodies.

The main thing is you did not kill your fellow mages, so you won't be blamed for their deaths.

After the first time you do this you will trigger the gaurds and mages to hate each other forever. After hunting in a dungeon or doing a quest, check-in on the guild to see if any new guards or mages are lying around dead.

While the mages increase their level as you do, the guards do not, after a while the gaurds won't stand a chance against the mages. To solve this, wait until morning when the captain of the guard is inspecting the courtyard of the guild. Get him as well as the two guards to follow you into the guild; the three of them tend to be a match for the higher level mages.

Lastly, if the guard only attacks you and won't attack the mages, use an invisibility spell and he will switch targets.