Since the 1980s, the Chilean Higher Education System has been characterized by continuous government policies for marketization (somewhat nuanced after the return to democracy in the 1990s) and a marked, unchallenged hierarchal relationship between vocational and academic qualifications and institutions. Vocational Education and Training (VET), in particular, has relied heavily on human capital theory as its conceptual foundation with a clear focus on preparing students to participate in the labour market by providing them with skills demanded by employers. However, during the 2014–2018 presidential cycle, major reforms were implemented by the government in both K-12 and post-secondary education, intending to establish a system based on quality, equality and free access to education. For VET, this meant the enactment of a series of public policies that attempted to shift its theoretical approach from human capital approach to a rights-based one, aiming to support both educational and labour trajectories of VET students. These efforts reached its tipping point in early 2018 with the enactment of a new Law on Higher Education which formally recognized Vocational Higher Education (Educación Superior Técnico-Profesional) as a distinct subsector of the higher education system, suggesting an epistemological differentiation from universities that contrasted the previous hierarchical distinctions. Hence, previous hierarchical differentiations in Chile’s higher education system (where VET is positioned in the lower stages of vertical structure) coexist with a more horizontal epistemological approach (which focuses on the distinction between VET’s applied knowledge and universities’ academic knowledge). This chapter discusses the implications of recent changes in Chilean educational policies for the relationship between Vocational Higher Education Institutions and universities. In doing so, it uses a theoretical background based on the distinction of different approaches to theoretical foundations of VET (human capital, rights-based education and human capabilities), VET identities (hierarchical, epistemological, teleological and pragmatic) and higher education systems typologies (vertical and horizontal). The analysis is based on a review of public policies for Vocational Higher Education in Chile, identifying major social and political phenomena affecting its development, including an analysis of the implications of various soft and hard laws enacted during the 2014–2018 presidential period and the paradoxes that appear at contrasting them with previous Higher Vocational Education policies (especially with those which are still in force). As a conclusion, it argues that major regulatory changes are needed to reinforce the shift from a hierarchical to an epistemological differentiation between the two sectors of Chilean higher education.