As far as I am aware there is not a free version, even for kids (students).
Linux is your answer as posted above and OpenOffice (http://www.openoffice.org/)
will run on linux and will allow your kids to edit any work that they have done previously in Microsoft Office and is your best bet if you want something truly free.
EDIT: If you already have a laptop what OS is already on it? You don't particularly need Win 7 ultimate for kids homework. If it's windows XP then just put OpenOffice on that and you should be sorted.