Student Transportation Announces TSX’s Approval of Normal Course Issuer Bid

Student Transportation Announces TSX’s Approval of Normal Course Issuer Bid

Toronto, Ontario, October 17, 2006 – Student Transportation of America Ltd. (TSX:STB.UN) and Student Transportation of America ULC (collectively, “STA”) announced today that the Toronto Stock Exchange (“TSX”) has approved STA’s notice of intention to make a normal course issuer bid for a portion of its 14% subordinate notes (“Notes”) as appropriate opportunities arise from time to time. STA’s normal course issuer bid will be made in accordance with the requirements of the exchange. STA may begin to purchase Notes on or about October 19, 2006. No previous purchases of the Notes have been made.


As of October 16, 2006, $89,881,239 million principal amount of Notes were outstanding. Pursuant to the notice, STA intends to acquire up to $3 million principal amount of Notes in the 12-month period commencing October 19, 2006 and ending on October 19, 2007, which figure represents 3.8% of STA’s the public float. Purchases will be made at market prices through the facilities of the exchange. The Notes will be cancelled upon their purchase by STA. STA will fund the purchases either through borrowings on its senior debt facility or out of available cash. The Board of Director of STA believes that the purchase by STA of a portion of its Notes is an appropriate use of senior borrowing capacity and/or available cash and is in the best interests of STA and its securityholders as such purchases would significantly lower the cost of funds related to the Notes cancelled.


“We are pleased that the TSX has accepted the normal course issuer bid, which we believe will improve our leverage levels and increase liquidity in the common shares of Student Transportation of America Ltd. and the Notes for investors considering the choice to separate their income participating securities” said Denis J. Gallagher, Chairman and Chief Executive Officer of Student Transportation.


The notice of intention provides that no appraisal or valuation regarding STA, its material assets or securities, has been prepared within the two years preceding the date of the notice.


Profile


Student Transportation is the fifth-largest provider of school bus transportation services in North America, conducting operations through local operating subsidiaries. Student Transportation has become a leading school transportation and management company by aggregating operations through the consolidation of existing providers and conversion of in-house operations and currently operates more than 4,000 school vehicles in North America. For more information, please visit www.sta-ips.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 the Student Transportation of America Ltd., Student Transportation of America ULC’s and Student Transportation of America Holdings, Inc.’s (the “Company”) results of operations, expense levels, seasonality, cash flows, performance, liquidity, borrowing availability, financial ratios, ability to execute the Company’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 the Company’s current expectations regarding anticipated future events, results, circumstances, performance or expectations that 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.


For more information contact:

Denis J. Gallagher

Chairman and Chief Executive Officer

Phone: (732) 280-4200

Fax: (732) 280-4213


Patrick J. Walker

Chief Financial Officer

Phone (732) 280-4200

Fax: (732) 280-4213


Keith P. Engelbert

Director of Investor Relations

Phone: (732) 280-4200

Fax: (732) 280-4213

kengelbert@sta-ips.com