At some point employers were no longer permitted to give IQ or intelligence tests to new recruits. The degrees became a cheap proxy for intelligence, as at least a demonstration of some basic skills, since a high school diploma did not guarantee this any more. A multi-trillion dollar scam because intelligence tests are “racist.”
The Supreme Court decision Griggs v. Duke Power in the early 1970s was the turning point. Competency/intelligence tests were deemed discriminatory, so a college degree became the substitute.