The general theory is that education is a quality signal to employers (or whoever!) since there is some level of effort required to complete a degree or any other qualification you care to mention. To illustrate this using an extreme case, you cannot pull a random Joe/Joan off the street into an exam and get them to pass it. This works in practice too - if it was easy, everyone would have a CS degree which implies that the more talented people find it easier to complete qualifications than less talented people. The upshot of this is that people who have degrees (or in this case a CS degree) are more talented than people without and they have shown more commitment to their chosen profession - another quality signal. Ditto higher degrees: More talented/committed people have Masters, professional qualifications etc.
Even with costly degrees here in the UK this still applies. We can all hopefully accept that if you get a 1st class cs degree from a Russell group uni you will earn more than a 3rd class (degree awarding) college degree. If you are SO clever, how come you did not get into Oxbridge and get a 1st? Money is not an excuse since you will make it back in next to no time (our earlier axiom/assumption). Have not got the time? All you blind-folded guys/gals with one hand behind your back should be able to do a degree part-time/online and still have time to party since you are so good and the work is easy. Again, money is not the issue (see earlier). Lazy? Yeah, it shows. Do not want to do a degree on principle? Another indicator that you are a moron and need to get with the world of work.
There will be people who have degrees and are useless but using degrees and qualifications is an effective filtering tool. After you have done the filtering, then look for the guys/gals with good experience. If anyone actually ends up working with a clueless noob then you need to get the techies into the interview process.
Biting the hand that feeds IT
