Maybe not permanently, but yes, it definitely hurt your career. I'm not sure why everyone wants to deny that what college is on your resume matters. It really does matter. Google hires from "top-tier schools" (you can get in via other paths, but that's the easy one, and the only way you can get to work at Google straight out of college). Likewise facebook and all the other hot places to work in technology.

I was unaware of this fact when I made my school decisions, and my parents were mostly unaware of this fact as well (having been the first in both their families to attend college of any sort; to them the distinction was "went to college" and recognized little difference between "went to a good college" and "went to a bad college"), so I somewhat aimlessly attended a community college for four years. It took me about 5 years from finishing school to get to the point where I could work in high-paying jobs alongside people who had degrees from MIT, Caltech, Duke, etc. And the most important element in that process was probably writing a technical book and getting it published by a well-known publisher. I wouldn't have needed that book and other experience and getting such a job could have happened immediately after college had I attended a good school.

I've rarely let this bother me, as I've always known I wanted to work for myself, and I don't need to see a diploma to know what I can do. But, I can say that there have been a few occasions in my life where I desperately needed to be able to get a job in order to pay my bills (running your own business when you don't know how can lead to running up a lot of debt), and the jobs I could get were simply awful. Without a good degree, and without a solid trail of work-experience, you don't get the callback on high-paying jobs. There are always candidates with a good education who will edge you out in the selection process.

I believe you're going to need to take the initiative and fix your situation yourself. It won't happen by accident, and it won't happen by staying in one low-level position until your superiors deem you worthy of promotion.

I wrote a book, got involved in numerous Open Source projects, spoke at conferences, and did really good work whenever I found myself in a contract position at a really good company (on a few occasions that led to full-time employment offers, including an office with more Ph.Ds per square meter than any other place I've stepped foot). I feel pretty confident that at this point in my life, I could get a job working at almost any tech company in the world, because I have so much to show for my time since college. But, I've been out of college for 12 years...that's a long time to wait to start getting good jobs and making a good salary.

You don't have to go back to school to "fix" the problem, but you do need to do something dramatic. Start a successful company. Write a book for publication (preferably a good one). Start an Open Source project and make it really successful. Just going to work every day will not cause the world to begin to agree with you on your value in the workplace. If you believe you're being undervalued and underutilized, you're going to have to do something about it.