When I worked at a small consultancy, we had similar requirements, Masters or higher. I asked our hiring manager (who himself was a 22-year-old student) why they did that. He told me that in any week they'd get 100 applicants, while hiring only about one dev per month. Sure, by requiring a degree they'd weed out a handful of great people, but also literal hundreds of idiots. And while there are idiots with degrees (as evidenced by the 80:1 hiring ratio), the number is apparently much smaller than for the general population.

I did not and do not agree with the practice, but I can also understand why it is in place.