Proceeds to Fund Redemption of 14% Subordinated Notes

Barrie, ON — Student Transportation of America Ltd. (“STA”) (TSX: STB) announced tonight that it has agreed to sell C$45 million of 7.5 percent convertible notes to a syndicate of banks led by BMO Nesbitt Burns Inc., and including CIBC World Markets Inc., Scotia Capital Inc., Cormark Securities Inc., Wellington West Capital Markets Inc., National Bank Financial Inc., and Raymond James Ltd. The “bought” deal will close on or about October 26, 2009. The proceeds of the deal will be used to repurchase the current 14 percent subordinated notes which are callable starting December 21, 2009 and for general corporate purposes.

“We have been following the markets for a while now and have mentioned previously we would like to purchase the current 14% notes if market conditions were favourable. The timing and market conditions are good for us now,” said Denis J. Gallagher, Chairman and Chief Executive Officer of STA. “This transaction allows us to have certainty today that we will be able to execute the call option on the 14% notes in December, effectively replacing them with new convertible debt at almost half the coupon. This will save us almost C$2 million in interest payments on an annualized basis, lower our cost of capital and ensures our commitment to our growth program and attractive dividend policy.” Gallagher added, “The transaction did require amendments to the current senior debt agreements which I am pleased to say were considered technical amendments and were approved by all senior lenders and did not require any re-pricing of the company’s current rates or changes to the borrowing ability.”

The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

About Student Transportation

Founded in 1997, Student Transportation of America (STA) is North America’s third-largest and fastest-growing provider of school bus transportation services, operating more than 6,300 vehicles. STA’s family of local companies delivers safe, reliable and cost-effective transportation solutions to school districts throughout the U.S. and Canada. Services are delivered by drivers, dispatchers, maintenance technicians, terminal managers and others who are caring members of their local communities. For more information, please visit www.rideSTA.com.

Forward-Looking Statements

This news release contains “forward-looking statements” within the meaning of applicable securities laws, which reflects the expectations of management regarding STA’s results of operations, expense levels, cost of capital, financial leverage, seasonality, cash flows, performance, liquidity, borrowing availability, financial ratios, ability to execute the STA’s growth strategy and cash distributions. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “track”, “targeted”, “estimate”, “anticipate”, “believe”, “should”, “plans” or “continue” or similar expressions suggesting future outcomes or events. These forward looking statements reflect STA’s current expectations regarding anticipated future events, results, circumstances, performance or expectations, which are not historical facts. Forward looking statements involve significant risks and uncertainties, and should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not or the times at which or by the performance or results will be achieved. A number of factors could cause our actual results to differ materially from the results discussed, expressed or implied in any forward-looking statement made by us or on our behalf, including, but not limited to the factors discussed under “Risk Factors” in our Annual Information Form. These forward looking statements are made as of the date of this news release and, except as required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

INVESTOR CONTACTS:

Student Transportation of America Ltd.

Denis J. Gallagher

Chairman and Chief Executive Officer

Patrick J. Walker

Executive Vice President and Chief Financial Officer

Keith P. Engelbert

Director of Investor Relations

(732) 280-4200

Email: [email protected]

Website: www.rideSTA.com