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DRIP FAQ

The following questions and answers are intended to assist beneficial shareholders of Student Transportation Inc. ("STI") in understanding certain features of STI's dividend reinvestment plan (the "Plan"). STI recommends that shareholders read carefully the full text of the Plan, a copy of which is available at here on STI's website, before making any decision regarding participation in the Plan.

What is the dividend reinvestment plan?

The Plan provides you with a convenient method to reinvest the cash dividends paid on your common shares in additional common shares issued by STI pursuant to the Plan.

What are the benefits of participating in the Plan?

There are several key benefits. As described further below, common shares purchased under the Plan are purchased at a discount to the average trading price of the common shares on the Toronto Stock Exchange ("TSX") prior to the purchase. As a participant, you will not have to pay any brokerage commissions on your common share purchases. Purchases of fractional and whole shares are credited to your account, facilitating a full investment of your dividends. In addition, the dividends will be reinvested immediately upon payment. All administrative costs of the Plan, including the fees and expenses of Computershare Trust Company of Canada (the "Agent"), are paid by STI.

Who is eligible to participate in the Plan?

To be eligible to participate in the Plan, you must either be (i) a Canadian resident, (ii) resident in a jurisdiction (other than the United States) in which participation in the Plan is permitted under applicable laws, or (iii) resident in the United States and be either (a) a director or officer of STI or (b) an "institutional accredited investor" under applicable U.S. securities laws. If you are unsure whether you are eligible to participate in the Plan, you should contact your broker or other investment dealer.

How can I become a Plan participant?

As a beneficial shareholder, you must contact your broker or other investment dealer directly in order to become a participant under the Plan.

When do I become a Plan participant?

You will become a participant in the Plan as of the first dividend record date following receipt by the Agent of a Plan enrolment form from your broker or other investment dealer (provided that the Agent receives the enrolment form at least 5 business days prior to the dividend record date). The dividend record dates of STI generally precede dividend payment dates by approximately two weeks. Once you enroll in the Plan, you will remain a Plan participant until you decide to voluntarily withdraw from the Plan or your participation is otherwise terminated in accordance with the Plan (see question 13 below).

How are common shares purchased under the Plan?

On each dividend payment date, STI will pay to the Agent, on behalf of Plan participants, all cash dividends (less any applicable withholding taxes) paid on their common shares (including any common shares previously purchased under the Plan). On the same date, the Agent will apply all such cash dividends to the purchase of additional common shares from STI.

What price will be paid for the shares purchased under the Plan?

On each dividend payment date, the Agent will purchase common shares directly from STI on behalf of Plan participants based on an average closing price for board lots (100 shares or multiples thereof) on the Toronto Stock Exchange for the five trading days preceding the applicable dividend payment date, and converted into US dollars at the daily Bank of Canada noon exchange rate posted on the last trading day of such five trading day period, less a discount of 3%.

How will I keep track of the common shares purchased on my behalf under the Plan?

An account will be maintained by the Agent for each Plan participant that is a registered holder of common shares and a report will be sent to such Plan participants on a quarterly basis. As a beneficial shareholder, you should contact your broker or other investment dealer to inquire as to whether you will be provided with a copy of such reports.

Can I purchase additional common shares under the Plan over and above those which my dividends will buy?

No. The Agent will only purchase common shares under the Plan using dividends paid on your common shares.

Are the common shares issued under the Plan registered under the United States Securities Act of 1933?

No. The securities offered under the Plan have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions exempt from the registration requirements of the U.S. Securities Act. The Plan does not constitute an offer for sale of securities in the U.S.

Once I am enrolled it the Plan, how do I cease to be a participant?

There are a number of ways that your participation in the Plan may terminate. You may voluntarily withdraw from the Plan at any time by contacting your broker or other investment dealer, who will provide notice of your withdrawal to the Agent. Termination of your participation in the Plan will be effective as of the next dividend record date that is at least 5 business days after the notice of withdrawal is receive by the Agent. In addition, if you cease to be eligible to participate in the Plan, you must immediately notify your broker or investment dealer and you will automatically cease to be a participant under the Plan (and all subsequent dividends will be paid in cash in the usual manner). Finally, STI may terminate the Plan at any time, in which case you would cease to be a participant in the Plan.

Can the Plan be changed or amended?

Yes. The Plan may be amended, suspended or terminated by the Company at any time. Any amendments to the terms of the Plan are subject to the prior approval of the TSX.

What are the income tax consequences of participating in the Plan?

If you are an individual who is resident in Canada for the purposes of the Income Tax Act (Canada) (the "Tax Act"), the amount of dividends reinvested in additional common shares will be taxed as a dividend and will be subject to the gross up and tax credit rules generally applicable to dividends received on common shares of taxable Canadian corporations (such as STI), notwithstanding that you do not receive any cash. No additional amount will be required to be included in your income in respect of the discount available on the purchase of additional common shares under the Plan (see question 7 above). The adjusted cost base of the common shares purchased under the Plan will be equal to the amount of your dividends that are reinvested, but that cost must be averaged with the adjusted cost base of all of your other common shares that are held as capital property at that time for purposes of calculating the adjusted cost base of the shares acquired under the Plan.

If you are not an individual or are not a resident of Canada, you should consult your own advisors with respect to the tax consequences of participation under the Plan. How can I get more information about the Plan?

Please refer to the full text of the Plan, a copy of which is available here on STI's website, for further details. If you have additional questions, you may contact the Agent's National Customer Contact Centre at 1-800-564-6253.