Wall, NJ – July 31, 2007 – Student Transportation of America Ltd. (“STA”) (TSX: STB.UN) reported it has received a U.S. $600,000 grant toward the purchase of Compressed Natural Gas (“CNG”) vehicles for its Riverside, California operations. The grant which was awarded from the South Coast Air Quality Management District (“SCAQMD”) will be applied to reduce the purchase price of new CNG vehicles servicing the Riverside United School District in California.

“We are pleased the SCAQMD has allowed STA to participate in this program and to receive these funds which reflects the differential purchase cost between a CNG school bus and a comparable diesel-powered school bus. These vehicles are manufactured by Blue Bird Corporation and we are grateful for their commitment to this program”, said Denis J. Gallagher, CEO of STA.

“STA is committed to be one of the leaders in providing safe transportation with vehicles that improve the air quality in this environmentally sensitive area”, Gallagher added. “We will continue to work with our customers, State and Federal agencies for grants relating to clean air solutions.” CNG is domestically produced and available to consumers through the existing utility infrastructure. It is cleaner burning and produces fewer harmful emissions than reformulated gasoline or diesel when used in natural gas vehicles.

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 4,500 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 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, including the acquisition of notes under the Exchange Offer, 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 acquisition of less than a significant number of notes under the Exchange Offer and 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 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]