Federal Reserve Chairman Ben Bernanke says students need to be careful when investing in their education.

Bernanke says taking on debt to pay for college can be an important way of increasing one's earning potential. But higher education can also become a financial burden if it doesn't lead to a good job, he warns.

"You've got to make smart investments," Bernanke said during a town hall meeting at the Fed with teachers from around the country.

Student loan debt has steadily increased since the Great Recession and totaled more than $900 billion in March, according the Federal Reserve Bank of New York.

Bernanke urged students to do their homework before taking out loans. They should know what kind of jobs and salaries they can expect to acquire with their degrees. They should also research schools' graduation rates.

A college degree can make a big difference for jobseekers, especially in a tough economy.

The unemployment rate for college graduates was 4.1 percent in July. That's well below the national rate of 8.3 percent and the rate of 8.7 percent for those with only a high school diploma.