Etherpad, which was open to users, then closed, appears to now be
open again. It is an online collaborative text editor usable by anyone
with an Internet connection, a browser, and Javascript. There is no sign
up required, you just share a unique URL with the people you want to
collaborate with. Each user is color coded and there is a chat box. You
can use the random URL assigned or make one up just by appending the
name of the document to the end of the url:
http://etherpad.com/NAMEOFDOCUMENT
It has a couple of advantages of using the word processing aspect of
Google Docs. For starters, it’s dead simple to get people involved just
by sharing the url. It is also realtime, you see the edits of the other
people as they make them. There is also a chat box to discuss changes as
you make them.

They also offer a private hosted version, but there isn’t any pricing
available on the website.

Although some school districts will be wary of using a product that
would allow their students to chat throughout the district, I think the
advantages would outweigh these concerns.

Uses in the school include after hour editing assistance, a student
could send the link to a document they’re working on to their teacher,
and both can work on the document. Also, any group projects could use it
for notes, planning, todo lists, etc., available to all the members of
the group.