Ontario's Progressive Conservative government is eliminating free tuition for students from low-income families while also cutting tuition fees.

The Ontario Student Assistance Plan grants had become unsustainable and it was time to refocus it to provide help to students in the most financial need, said Training, Colleges and Universities Minister Merrilee Fullerton.

"The previous government believed in handing out OSAP money to some of Ontario's highest income earners with virtually no meaningful criteria for success," she said.

The previous Liberal government increased the number of grants and made it possible for low-income students to attend college or university free of cost. But the auditor general found last month that costs for that program jumped by 25 per cent and warned it could grow to $2 billion annually by 2020-21.

Under the Liberal plan, families earning up to $175,000 could qualify for some funding and that threshold is now reduced to $140,000. Low-income students could qualify for grants large enough to cover the full cost of tuition under the previous plan, but now a portion of the funding they receive will be a loan.

Most of the grants will go to students whose families have an income of less than $50,000.

At the same time, tuition fees are being cut, the government announced. The current tuition fee framework, which has capped increases for most programs at three per cent, expires at the end of this academic year. Under a new framework, tuition would decrease by 10 per cent for the 2019-2020 year, then be frozen for the following year.

Colleges and universities will be expected to absorb the loss in revenue, Fullerton said.

"They will make choices in terms of what they need to do," she said. "They will be able to determine what they need to do to change, to adapt and innovate."

A 10-per-cent tuition cut would take about $360 million away from universities and $80 million from colleges.

Core operating grants from the government to post-secondary institutions are contingent on their compliance with the tuition cut, but Fullerton said those grants -- another important source of funding for post-secondary institutions -- would not be reduced.

Fullerton also announced that universities and colleges will have to give students the option of what additional fees they pay, such as those that fund campus organizations and clubs. Some will remain mandatory, Fullerton said, including walksafe programs, health and counselling, athletics and recreation and academic support.