One explanation I've heard is insurance - a degree is supposed to prevent someone from making mistakes so egregious that the person ends up in a life of poverty

One explanation I've heard is insurance - a degree is supposed to prevent someone from making mistakes so egregious that the person ends up in a life of poverty. As you pointed out, degrees are overwhelmingly received by people who already have some family wealth, so it's easy to sell university as the cause of those higher lifetime earnings.