This dissertation presents evidence about implementing a free college policy on higher education's demand and supply. This analysis includes descriptive evidence about the impact of the policy on students and programs' behavior. It also develops and estimates a demand and supply model of higher education that provides a framework to analyze the channels through which the policy operates.The free college policy has gained traction in the US and other countries in the past years. Free college is one policy tool that affects students' behavior through multiple channels, including how they apply to college due to changes in relative prices. Free college policies can lower tuition revenue constraining the resources available to institutions. In response, they may re-optimize their capacity and price choices if they take the form of targeted subsidies. Supply responses can impact access and quality of education for groups of students. Disregarding this impact misrepresents the welfare consequences of free college. This dissertation studies the equilibrium effects of free college. Understanding these effects allows for analyzing counterfactual scenarios such as expansions of free college or changes in the choices of institutions. I explore these questions in the context of the Chilean implementation of free college that operates as a voucher to income-eligible students, introducing differentiation between eligible and non-eligible students that matters for institutions' revenue. I characterize and measure the demand and supply reactions using a combination of descriptive results and a structural model. First, I present descriptive evidence from a difference-in-difference strategy with variation in treatment intensity at the program level. Regarding demand, applications, and enrollment increase more in programs that were relatively more expensive before free college. And in terms of supply, programs increased capacity and price more if their revenue would have decreased given the change in demand induced by the policy. Second, I estimate an empirical demand model with preference heterogeneity and a discrete choice supply model. Using the results of the estimation, I evaluate the impact of supply responses by analyzing a decomposition counterfactual that compares the welfare of students before and after free college and also in a case when supply responses are restricted. Even though the policy is mostly welfare-enhancing for eligible students, supply responses dampen the welfare of almost half of all the students. Mainly, non-eligible students experienced a significant reduction driven by displacement to the outside option and price increases. Hence, supply responses are of the first order and need to be considered when designing financial aid policies such as free college. [The dissertation citations contained here are published with the permission of ProQuest LLC. Further reproduction is prohibited without permission. Copies of dissertations may be obtained by Telephone (800) 1-800-521-0600. Web page: http://bibliotheek.ehb.be:2222/en-US/products/dissertations/individuals.shtml.]