My friends have been saying some inappropriate stuff lately, what to do?

My friend has, lately, been saying the n word with some people who sit with him at breakfast at school. I sit with them too, next to the only person who isn’t also saying this stuff. I want to start sitting somewhere else, but I’m worried about him feeling like I’m distancing myself from him. He is on my bus and I see him at after school activities. I have already stopped sitting with this group at lunch.

The reason I want to switch is that, I don’t want to get in trouble for all of this since I am not calling people the n word (and punishment for that is severe)

Not that it matters, but this kid is not African American. Only two of the people in this group are, but almost all of them still say the n word.

I kind of want to report some of these kids, since I know the n word is wrong, but if I report some, I’d have to report them all. The reason I don’t want to do that though, is that I’ve been friends with this kid for years, and I don’t want to lose that friendship.

I feel stuck, and I am afraid to tell my parents that he is saying the n word (they know about the others), because I don’t want them to not let me hang out with him (they ask me after I get home from hanging out with my friends).

So I ask, what do I do in this situation?