Student Transportation Announces Intention to Seek Increase to Existing Senior Credit Facility

Proceeds from pending private placement will reduce debt and strengthen balance sheet

TORONTO (Oct. 18, 2005) - Student Transportation of America, Ltd. (STA), 
(TSX: STB.UN) today announced it intends to seek an amendment to increase its 
existing credit facility for growth to US $50 million for its pipeline of 
acquisitions and bid-ins throughout North America. The company said the 
proceeds after costs of the recently announced Cdn $37.2 million bought deal 
will be used entirely to pay down debt on its existing credit facilities. The 
Company said in light of its improved financial performance over the past 
year, it anticipates securing more favourable terms. 

Commenting on the intended amendment, Chairman and CEO of STA Denis J. 
Gallagher said, "Our bank group has been extremely supportive since our 
inception almost eight years ago. When we completed our IPO in December, we 
put into place a US $15 million line for growth and recently increased that by 
$5 million for the US operations and Cdn $10 million for our expansion into 
Canada. Since December we have spent that money wisely, growing our business 
by almost 30 per cent, increasing cash available for distributions and 
lowering our pay-out ratio." Gallagher added, "There are plenty of 
opportunities we plan on taking advantage of this year, as we have a strong 
balance sheet and an increased line of credit to use for our ABC strategy of 
growth. We have continued renewing our revenue contracts at favourable terms 
with regards to fuel and CPI increases to further secure our long-term revenue 
stream. With an active pipeline of growth opportunities under review, we plan 
to use the increased growth facility with the same disciplined approach as we 
have shown in the past. Management's plan is to increase cash available for 
distributions."

STA is the fifth largest provider of school bus transportation services 
in North America, conducting operations through local operating subsidiaries. 
STA has become a leading school bus transportation company by aggregating 
operations through the consolidation of existing providers and conversion of 
in-house operations, and currently operates more than 3,300 school vehicles in 
North America. For more information, please visit www.sta-ips.com.

This news release contains "forward-looking statements" within the 
meaning of applicable securities laws. These statements concern anticipated 
future events, results, circumstances, performance or expectations that are 
not historical facts. These statements are not guarantees of future 
performance and are subject to numerous risks and uncertainties that can 
affect our actual results and could cause our actual results to differ 
materially from those expressed or implied in any forward-looking statement 
made by us or on our behalf. These statements are made as of the date of this 
news release and, expect 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.

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(at)ridesta.com