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Students make their way to classes at Dalhousie University in Halifax, September 12, 2007.

Paul Darrow For The Globe and Mail/paul darrow The Globe and Mail

The Nova Scotia government will allow tuition fees to rise by three per cent a year while reducing its grant to universities.

The government announced a new three-year memorandum of understanding today with university presidents.

Marilyn More, the minister of advanced education, says the province's 11 universities will get a grant of $324-million for 2012-13.

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That's three per cent less than the previous operating grant.

The agreement also includes a $25-million fund to encourage universities to find ways to cut costs.

The Alliance of Nova Scotia Students Associations panned the deal, saying it will hurt the quality of education.

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