Take a look at Writely. This is an online word processor. The whole thing runs in a browser window, so there’s no need to purchase and install software on your computer. It has all of the features you’d expect — the abillity to change fonts, text styles, colors, etc. You can add graphics and tables. You can save, and print. That’s all pretty standard stuff.
But here’s where it gets interesting. What if you’re collaboratively working on a document with a group of people? You all want to be able to access the document and make changes to it. Of course, in school, you could save it on a network drive that everyone has access to. But if you’re working at home, your only option is to email the file to one another. That will result in multiple versions of the file, with different people editing different versions. You’ll inevitably end up with multple versions that will have to be combined in the end.
Writely allows you to collaborate online. You simply specify the email addresses of the people who can access the file, and it sends them a note asking them to contribute to the document. If you want people to be able to read it, but not change it, you can also "publish" it and make it available online that way.
When you’re finished, you can export the file as a Microsoft Word document, an OpenOffice document, or a rich text file (that can be opened in any word processor).
You’re certainly giving up a few features by using this product. It doesn’t have all of the bells and whistles that Microsoft Word includes. But it is a lot cheaper. And it’s a lot easier to collaborate with it. And, it’s free.