There are several free options out that educators, students and really anyone can use. Here are links and my opinion on 3 of them:
Google docs - This is my favourite, it's free easy to use and you don't have to worry about saving your materials or finding them. The more I use Google Docs the more I like it.
Open Office - Is an excellent free tool. You can make all documents, spreadsheet and presentation items that are similar to Microsoft products all for free. You can save work in a variety of format. We started using this at school to save cost and I must admit I was used to working with Microsoft products but didn't like the "lite" or 'student" version so now using Open office and it works great. I'd like more of the taxpayers money for education put into people and hardware than expensive software. test it out.
ZOHO ZOHO is free office tools including traditional items like documents and spreadsheets but also has wiki, chatt, meeting room, and many more. think of it as a Free option to -office, Frist class and Adobe connect. now Zoho does have some versions that are paid, so kind of a combined approach, but still worth testing out. They are looking at having a free version for educators - so I'm kind of waiting on that.