College isn't cheap and the costs are rising fast. If you don't start saving for your children as soon as possible, their chances of having sizable student loan debt after graduation is high.

The 529 plan is a tax-advantaged investment plan that you set up to help multiply your efforts. There's lots of basic information about these plans (click here for our tutorial), but here are some facts you may not know.

1. Donors Can Invest Up to $14,000 per Year

If you have a wealthy benefactor, such as a grandparent, who wants to invest a large amount of money into the fund, that may not be possible. The official IRS language is, Contributions can not exceed the amount necessary to provide for the qualified education expenses of the beneficiary. In addition, any individual gift over $14,000 is likely to trigger gift taxes.

In reality, you probably won't have to deal with gifts that large. If you do, it's best to talk to a tax professional about the maximum possible investment. The laws surrounding gift taxes are complicated.

2. You Can Receive Funds at Any Age

The 529 plan is normally used by parents of young children who want to have a substantial amount to pay for their child's college expenses, but there is no age limit on the beneficiary. If you plan to go back to school sometime in the future, starting a 529 for yourself may make sense.

3. It's Not Just for Tuition

A 529 plan doesn't just cover tuition. The IRS says that it covers eligible expenses. These include books, computers, room and board, and Internet service. If a meal plan is included in the price of tuition, that's covered, and if you have to eat out because the dining hall isn't open, you could use the money for that as well.

A good rule of thumb is, if you are required to have something as part of your college education, you can probably use 529 funds to purchase it.

What's not covered: transportation to and from school, expenses related to elective activities such sports and clubs, and entertainment costs.

4. Save More Than $300 per Month

The sobering truth is that from the time your child is born, plan on contributing more than $300 per month if you want to cover his or her college costs. Assuming that grants, scholarships and other aid will cover part of the bill, you could plan on covering about 80% of the cost.

If you figure that the cost of college with rise about 4% annually – and you will earn about 6% on your contributions – you have to contribute about $372 each month until your child graduates from college to meet your goal. If you start much later, you have to contribute more. Use this calculator to figure out your contribution rate.

5. Most 529s Are Stock-Based Funds

Eighteen years isn't very long to accumulate a six-figure stash for college so your money has to go into stock-based investments. That's good because it allows for bigger gains – 6% or more – but it could also allow for big losses. In 2008, during the stock market crash, the average 529 plan lost 24% in the one year alone. Because savers can only make changes to their investment allocation once per year, people were often powerless to protect themselves.

There's little you can do to avoid the risk, but have a backup plan in case the markets enter a period of correction that causes a major decline just when you need the money.

Despite the risks, a 529 plan is still better than a regular savings account for building wealth. The returns on a savings account aren't adequate and you have to pay taxes on them. Regular investment accounts give you more options and liquidity but since they aren't tax-advantaged vehicles, the returns aren't as good.

Contribute as much as you can but expect some ups and downs. For more information, see 529 Risks To Take (Or Not) and Top Companies That Manage 529 Plans.