Ethics and virtues

In a doctoral level Ethics class, over Zoom, a student used the word "retarded" to describe governmental policy around licensure of the counselling profession. The first time she said it, I thought I must have misheard her, but she said it a second time to remove all doubt. No one said anything, not even the professor. Maybe we were all too startled to react, or maybe it's just me who thinks that this word isn't the one to choose for this situation.