Illegal. And that is the reason for the education bubble.
Fifty years ago, businesses routinely administered IQ and academic tests to determine what jobs people were suitable for. Then, in Griggs v. Duke Power Co (1971), the Supreme Court ruled that under Title VII of the Civil Rights Act, if such tests disparately impact ethnic minority groups, businesses must demonstrate that such tests are "reasonably related" to the job for which the test is required.
So businesses decided to require degrees as an expensive substitute for such tests.
We need to repeal the various "Civil Rights Acts" first.
I've been looking for this answer for 25 years. I could never understand why businesses cared about college degrees.