Toronto, ON, July 19, 2006 – Student Transportation of America Ltd. (TSX: STB.UN) today announced that its newly formed subsidiary, Altoona Student Transportation, Inc., has been awarded a contract to privatize the transportation services for the Altoona Area School District (AASD) in Pennsylvania. The new contract will generate more than US $2.5 million in annual revenue beginning this school year.

“This conversion is extremely important in our efforts to partner with school districts throughout North America who seek a local approach to the management of their transportation services. It adds to our density in Western Pennsylvania, and delivers on our strategy of completing acquisitions, bids and conversions — our ABCs of growth,” said Denis J. Gallagher, Chairman and CEO. “It is our largest conversion to date and includes a favourable cap on the price of fuel. We are extremely pleased to have the full support of the drivers and their organization, and we look forward to a long relationship with the district, drivers and community.”

“Conversion is the best option for the school district,” said Dennis Murray, Superintendent of the AASD. “Working with Student Transportation, we expect to save a minimum of US $100,000 annually. This is the fourth time that Altoona investigated whether to privatize and this is the only time it worked.”

Student Transportation plans to implement a new computerized routing and scheduling system during the first year to find ways to reduce future costs and create efficiencies in a unique gain sharing program.

The AASD conversion is one of the largest in the history of Pennsylvania. It is Student Transportation’s largest since its IPO in December 2004, and seventh since its inception in 1997. AASD is one of Pennsylvania’s largest school districts, with a student population of 8,400. The contract is effective for the 2006-2007 school year and has a five-year term.

“School Districts are continuing to look for ways to maximize efficiencies and concentrate on what they do best — educate,” said Gallagher. “With more than 65% of school districts in the U.S. still owning and operating their own fleets, we see excellent opportunities for future conversions.”

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 Issuer’s and Company’s 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

[email protected]