In last week's decision to raise rates, Fed officials indicated that full employment is getting closer, with the jobless rate currently at 4.6 percent.
Job creation has been steady and job openings are up, Yellen said in prepared remarks Monday to a University of Baltimore commencement ceremony, where she was due to receive an honorary degree. She also mentioned challenges, including "slow economic growth" and "disappointing productivity."
Recent economic gains have raised living standards, she said, citing trends toward technology and globalization that have increased the demand for college degrees. Yellen also noted the college-to-high school diploma pay gap is now 70 percent, compared with 20 percent in 1980.
"Economists are not certain about many things. But we are quite certain that a college diploma or an advanced degree is a key to economic success," Yellen said.
In its statement last week, the Federal Open Market Committee said "economic activity has been expanding at a moderate pace since mid-year," which was an upgrade from November's assessment that growth had "picked up from the modest pace seen in the first half of this year."
—Reuters and CNBC's Jeff Cox contributed to this report.