8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) March 17, 2008

Capella Education Company

(Exact name of Registrant as specified in its charter)

Minnesota	001-33140	41-1717955
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

225 South 6th Street, 9th Floor Minneapolis, Minnesota	55402
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (888) 227-3552

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

Effective March 17, 2008, Capella Education Company entered into an amendment of our current lease with Minneapolis 225 Holdings, LLC pursuant to which we will renew and expand our existing lease for premises at 225 South Sixth Street in Minneapolis, Minnesota. The lease amendment will permit us, commencing in 2009, to have our on-site Minneapolis staff located at one location. A press release announcing our lease amendment is attached as Exhibit 99.1 to this Report.

Our current lease for 225 South Sixth expires October 31, 2010 and covers 203,321 square feet. The terms of the lease amendment include:

• Five year extension of existing lease term through October 31, 2015;

• Effective March 1, 2009, the right to rename the tower located at 225 South Sixth Street “Capella Tower;”

• Staged expansion into spaces contiguous to current premises beginning in 2008 and continuing through 2009;

• Total of 395,638 square feet committed in 2009 through remaining term of lease, with additional options to acquire additional contiguous spaces prior to and in 2011;

• Base rents (exclusive of charges for operating costs and taxes) range from $11.25 to $16.30 per square foot (depending on the space at issue, when space is added to the premises, and the amount of the applicable improvement allowance) through the end of the extension term;

• Landlord-funded tenant improvement allowance of $7.6 million, to be advanced as the staged expansion occurs; and

• Unilateral tenant right to extend lease for two successive periods of five years each.

Item 9.01. Financial Statements and Exhibits.

99.1 Press Release dated March 20, 2008.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CAPELLA EDUCATION COMPANY
Date: March 20, 2008	By	/s/ Lois M. Martin
		Lois M. Martin
		Senior Vice President and Chief Financial Officer

EX-99.1

NEWS RELEASE: For immediate release

Investor Contact:	Media Contact:
Heide Erickson	Irene Silber
Capella Education Company	Capella Education Company
612-977-5172	612-977-4132
Heide.Erickson@capella.edu	Irene.Silber@capella.edu

Prominent Minneapolis office building to be renamed Capella Tower with renewed and expanded lease by Capella Education Company

The parent company of Capella University will consolidate its more than 1,150 Twin cities-based employees at 225 South Sixth Street in downtown Minneapolis early in 2009

MINNEAPOLIS, March 20, 2008 – The tower of the largest office building in Minneapolis, currently known as 225 South Sixth, will be renamed the Capella Tower under an expanded and extended lease by its largest tenant, Capella Education Company (NASDAQ: CPLA). Capella, which is the parent company of the fully online Capella University (www.capella.edu), will bring together its more than 1,150 Twin Cities-based employees in the building complex in early 2009.

“As the most literate city in America, and a leading center of the knowledge and creative economy, Minneapolis welcomes Capella University’s continued growth and success with open arms,” said Minneapolis Mayor R.T. Rybak. “In just 15 years, Capella University has grown to be an innovative leader in higher education, and all of Minneapolis should be proud that they will continue to call our city home.”

Capella, which has leased space in 225 South Sixth since 2004, currently occupies 203,000 square feet of space, and will eventually occupy approximately 400,000 square feet after all of its employees currently officed in the Campbell Mithun Tower (also located in downtown Minneapolis) are relocated to 225 South Sixth. The new agreement provides Capella with the flexibility to accommodate future growth.

“We are excited about our expansion in downtown Minneapolis and believe that our consolidated downtown location will be a key factor in allowing Capella to continue to attract outstanding, highly committed employees and faculty,” said Capella Chairman and CEO Steve Shank.

Capella teamed with Tom Hauschild and Dan Johnson of The TEGRA Group in the market search and negotiations of the expanded and extended lease. The building owner, ASB Capital Management, was represented by Bob Pfefferle and Mike Julius of Hines.

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Prominent Minneapolis office building to be renamed Capella Tower with renewed and expanded lease by Capella Education Company

“We are proud of our association with Capella, a true innovator and leader in the field of higher education, and of our long-standing presence and support for the City of Minneapolis through our various commercial real estate holdings, including Capella Tower. Hines has also been a great partner of ASB’s and they were instrumental in this lease renewal process,” said Robert B. Bellinger, president of ASB Capital’s Real Estate Investments Division.

About Capella Education Company

Founded in 1991, Capella Education Company (NASDAQ: CPLA) is a national leader in online education and parent company of Capella University, a regionally accredited*, online university. Capella University offers graduate degree programs in business, information technology, education, human services, psychology, public health, and public safety, and bachelor’s degree programs in business, information technology, and public safety. These academic programs are designed to meet the needs of working adults, combining high quality, competency-based curricula with the convenience and flexibility of an online learning format. Currently, Capella University offers 19 graduate and undergraduate degree programs with 104 specializations and more than 950 courses. More than 22,000 learners were enrolled as of Dec. 31, 2007. For more information about Capella Education Company, please visit http://www.capellaeducation.com. For more information about Capella University, please visit http://www.capella.edu or call 1.888.CAPELLA (227.3552).

* Capella University is accredited by The Higher Learning Commission and is a member of the North Central Association of Colleges and Schools (NCA), http://www.ncahlc.org. Capella University, 225 South Sixth Street, Ninth Floor, Minneapolis, MN 55402, 1.888.CAPELLA (227.3552), www.capella.edu.