Is there a site where I can set up my own private chat room?

Yahoo groups enables this. You would have to institute some safety controls so your students don’t roam unsafely.

Campfire was used by Fluther before the built-in chatrooms. It had some small problems, but it could be a good solution for you. Definitely not free, though.

meebo.com <—Free!
You don’t have to download, either :)
Just click the “rooms” tab at the to of the homepage.

You could use nicenet and create an online classroom, in which it is set up as more of a forum, where you set up threads, and students can respond. I use it and though the interface is unattractive, it’s simple. Just make sure not to go to nicenet.com. It’s not nice.

Hmm, maybe you should give Google Wave a try? It’s very cool for collaboration-type activities and discussions.

Teen Second Life allows you to build an island that only you and your students can use. You have to go through a background check to get in as an educator, and it allows the students to build avatars and interact in a variety of different ways, including chat. However, the system requirements are pretty high.

Google Wave is now open to everybody. And gggritso is right, it’s an awesome collaboration tool for co-workers and classmates. No need for an invite anymore, just have everybody visit wave.google.com to create their own free account. Collaboration is real-time like chat, but participants can view multiple threads in the same document. Very cool.