Self-described “education technology company” ePals has announced a landmark deal with the New York City Department of Education (DOE) to provide Microsoft Live@edu-powered e-mail to the city’s 2 million or so students and parents for the next five years. Here’s the scoop.

We’ve discussed the benefits of Microsoft Live@edu in particular and hosted messaging in general to the education market a lot recently, so I won’t go into too much detail.

But to the NYC DOE, it’s a big deal: they can save an estimated $5 million annually, according to the ePals press release, and ePals isn’t charging the public schools themselves a dime. Parents can use the messaging system to receive important messages from the school, even if they are themselves sans e-mail access, and students can use it to communicate safely and securely with teachers and each other.

Moreover, ePals provides automatic translation tools for the 40 percent of NYC students who don’t speak English as a first language, message filtering of the kind to forbid elementary school students from corresponding with high schoolers, and collaboration with other students and mentors in relevant topics.

This deal hits close to home: I’m personally a dyed-in-the-wool New Yorker, and I have some insight as to the challenges city schools face. So while I’m sure Google is disappointed it’s not their name in the headline, anything that helps the struggling DOE save money while improving functionality is a net positive.