Ontario's colleges and universities minister says the amount of new grants that will make tuition free for thousands of students will rise along with tuition fees.

The Liberal government announced in its budget last week that it is combining existing programs to create an Ontario Student Grant, which would entirely pay for average college or university tuition for students from families with incomes of $50,000 or less.

Under the new program, half of students from families with incomes of $83,000 will qualify for non-repayable grants to cover their tuition and no student will receive less than they can currently receive.

Next year, as the grants are set to take effect, a cap on tuition hikes that had limited increases to an average of three per cent annually ends.

Training, Colleges and Universities Minister Reza Moridi says that the grants will be indexed both to inflation and to tuition itself, saying that if tuition fees go up, so will the grants.

Premier Kathleen Wynne says the new program will cover average tuition for more than 150,000 students and make it more affordable for thousands more.