I can see where you are coming from. I have noticed that with some of the "lifers" eventually they grow bitter and angry that they have not been able to move up..... so I can see why they would want to avoid that.
However, we are all forgetting about the Sr TL position. I mean, if you are a Sr TL you are pretty much an ETL. (and over time can actually make more than an ETL especially when you factor in the extra hours ETLs put in) So to say that TL's can't make it to ETL because of the lack of a degree is not actually true. SR TL/ETL... pretty much the same thing. Now of course you can argue TL's without a degree could never make it to STL or above, but in all honesty how many ETLs have you ever seen make it any higher than ETL?
I have been with the company 6+ years and in all that time I have seen absolutely zero ETL's promote above ETL. I have, however, seen a ton of them leave or get termed. And I mean a ton of them. ETL's might dream of being STL, but it is a dream that few ever even get close to obtaining. Let's remember that STLs usually make $100,000+ a year. It is not a position the company just hands out to anyone. Most STL's I have asked usually have a Master's degree in business admin or something equally impressive. (again, something most ETLs do not have) Hell, our last two STL's were external hires. Seems you've got a better chance of making it to STL if you come from Macy's than an ETL does.
Anyway - the point is the company starting to demand TL's have degrees on the basis that "one day they can make STL" is pretty much BS. But for Target I could see them do it. I can think of at least 5 really damn good TM's at my store that have been told "one day" they will make TL who have worked their asses off for years and are still TM's.... always being told TL is right around the corner....
I get what you're trying to say, but I think you're ignoring the numbers game that is promotions in any company/business.
Almost all businesses are shaped like a pyramid, the lowest level gets paid the least, tends to work most directly with the customer(s), has the most physically demanding job, they are the easiest to replace, the least qualified, etc. They're absolutely essential to the business function, but they are the bottom (this would be TMs). Next you have supervisors, they tend to be more experienced, less directly involved with customers, less physically demanded upon, higher paid, and have higher education levels both internally and externally (TLs). And it goes up and up to the CEO/President/Owner. The common theme, and why the pyramid analogy is used, is that there are fewer and fewer as you go up.
Look at your average Target, how many TMs are there? 80 at minimum? Maybe, 3-4x that at a high volume Super Target? Now how many TLs are there at these stores? ETLs? Only one STL, only one DTL.... you get where I'm going? For every TL position that opens up, how many TMs want that spot? How many externals want that spot? Not everyone can get it. How often does a TL spot open up? Now magnify that with ETLs, how many TLs and externals want that spot? Now look at STL, a position that people would readily move across the country for, how many ETLs are competing for that one open STL position?
Of course you won't see many ETLs move up to STL. It's a bit odd that no ETL you've come in contact with has been promoted, but it's not unreasonable. You're talking about dozens, if not hundreds of ETLs looking to take that ONE STL position. All have degrees, many are happy/motivated/strong workers, many have produced increased sales/performance, but only one can get that position. Now think about a DTL position opening? Every STL in the country is going to want that job, but only one can get it. How often is a DTL spot going to open up? It's a numbers game, only the best of the best are going to make it to STL in anything resembling a quick fashion and some pretty good ETLs will NEVER get a STL spot. It's not bias towards externals, it's not Target being mean, it's life in the business world.
Also, MBAs are pretty darn easy to get. I have several friends and relatives who have their MBA, the universal opinion is that it was WAY easier than getting a Bachelors.