Life-Insurance Deals May Be Costly for Colleges

Experts say high fees and financing structures may hurt returns for institutions that take out policies on alumni

In the past two months, nearly 100 colleges have started exploring a financial concept that seems almost too good to be true: collecting hundreds of millions of dollars for long-term capital needs by taking out life-insurance policies on wealthy alumni.

The idea started with Oklahoma State University, which said this spring that it had secured some $270-million for its athletics program by setting up life-insurance policies on 27 boosters. The university said it would borrow

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