Harvard University announced plans last week to pay off more than two billion dollars of debt through a bond issuance, employing a funding strategy already adopted by universities — including Yale — that seeks to make the most of a low global interest-rate environment.

In a series of statements released Sept. 28, Harvard announced its plan to issue $1.5 billion worth of tax-exempt bonds through a state agency, as well as about $980 million of taxable bonds through the school’s governing board. The near-$2.5 billion in bonds will help Harvard pay off its comparatively high interest-rate debt issued in 2008 through borrowing at the lower interest rates available in 2016. The latest bond issuance will refinance debt incurred eight years ago, which includes fees from the termination of investment instruments such as interest-rate swaps that had cost the school during the 2008 financial crisis.

“The decision to raise new, lower-cost debt to retire higher cost bond issues is consistent with taking advantage of low-cost opportunities available during favorable capital-market conditions,” Heather Tookes, professor of finance at the Yale School of Management, said in an email. “Given that Harvard raised relatively expensive debt to cover derivatives losses experienced during the crisis, it makes a lot of sense for them to look for opportunities to reduce their current costs of debt service.”

Prior to the financial crisis, Harvard made interest-rate swap agreements — a derivative instrument that banks advertised to schools as a protection against spikes in interest — in an effort to finance building projects, including a $1 billion science center. The agreements required the school to post a significant amount of collateral in the event that interest rates fell. When the effects of the 2008 crisis compelled central banks worldwide to lower interest rates, Harvard made the costly decision to terminate the swap agreements instead of posting the required collateral. Over the past eight years, Harvard has paid about $1.25 billion in swap termination fees.

In a report released this summer, the Roosevelt Institute, a liberal think tank based out of New York, criticized higher-education institutions for investing in complex financial instruments like interest-rate swaps. Joelle Gamble, director of the institute’s national network, told the News that many colleges and universities have gotten “entangled” in such investments without understanding the full implications — the risks and pitfalls — of these instruments.

The report found that among a random sample of colleges and universities around the U.S., 58 percent have such swaps on their books. At least four other schools — Cornell, Georgetown, Michigan State University and the City University of New York — have each incurred more than $100 million in total swap payments and termination costs.

According to Yale’s Financial Report for the 2015 fiscal year, the University was still investing in interest-rate swaps to protect against market volatility as of June 30, 2015. Unlike some of its peers, Yale has not incurred similarly significant long-term costs from such swaps.

The Roosevelt report also blamed banks for irresponsibly selling complex investment instruments to higher-education institutions.

“Banks that sold interest-rate swaps to colleges and universities typically misrepresented the risks inherent in the deals,” the report said. “This likely violated the federal fair dealing rule and state laws for fraudulent concealment or misrepresentation.”

According to Charlie Eaton, a postdoctoral scholar at Stanford University studying the role of finance in higher education, the widespread adoption of complex and riskier investment instruments is partially a reflection of the increasing representation of Wall Street professionals on governing boards of colleges and universities. A study published by the Stanford Social Innovation Review in 2015 found that the proportion of financial services professionals on the governing boards of major U.S. private research universities increased from 19 to 40 percent between 1989 and 2014.

“While we’ve had other periods in U.S. history where the financial sector has had unusual levels of power, what is different about today is that even nonprofit organizations like universities are adopting these complicated financial strategies,” Eaton added. “In some cases, they’re adopting them like an ideology in which they’re making assumptions that might not really make sense for a nonprofit institution.”

The decision of universities to raise money through bond issuances, a more stable financial strategy, was viewed with wide encouragement by financial experts.

William Jarvis ’77, executive director of the Commonfund Institute, a firm that monitors institutional investments, said that issuing bonds helps higher-education institutions that have reliable sources of income address the challenges posed by seeking funding in a low interest-rate environment.

For bond issuances, however, low interest rates can be advantageous.

“There is currently an excess demand in the market for low-risk bonds,” said hedge fund manager and SOM finance professor Roger Ibbotson. “Many people are willing to invest in such bonds — even if the yields are low — in order to keep their money safe from default risks.”

Ibbotson said bond issuance is particularly effective for issuing institutions with a high credit rating, as in the case of Harvard and Yale. In its latest report, the ratings agency Moody’s gave Harvard’s and Yale’s most recent bonds their highest rating, at time of publication.“Yale University’s ‘Aaa’ rating reflects its international reputation for premier academic programs and research, exceptional fundraising, excellent coverage of debt and operations from financial reserves and strengthened fiscal stewardship,” the Moody’s report said. Similar language was used to support the agency’s “Aaa” rating for Harvard’s bonds.

According to an email from the University Chief Financial Officer Stephen Murphy ’87, Yale had $3.6 billion in debt as of June 30, 2015. The University’s latest financial report indicated that Yale had an outstanding balance of about $2.9 billion worth of tax-exempt bonds issued through the Connecticut Health and Educational Facilities Authority.

Murphy added that debt has been used primarily to finance building projects across the campus, including the residential colleges, medical services buildings and faculty and administrative offices.

“Debt provides an important source of funds for the capital program, which maintains and builds the spaces where teaching and research happen at Yale,” Murphy said.