Racist jokes were standard fare when I was around that age, and I went to really mixed schools in NYC. It was mostly just kids reciting offensive shit to one-up each other or make the other one laugh. Remember, this was in very mixed schools in NYC, and most of my friends were minorities (black, Hispanic, Asian) which is where the bulk of the jokes originated. Obviously, the jokes had to have been learned somewhere and I'm certain everyone harbors biases they may not even be consciously aware of. This particular incident was in a majority white city which means it's far less surprising to me given what I heard growing up. Some of the most racist shit I've ever heard has come out of the mouths of my own Hispanic family, so I imagine they've heard their share living in an 80% white city. Kids are much more susceptible to repeating and learning the things they hear.
A part of me understands the sort of mentality that leads to people saying horrid shit in private (or even public), especially at that age, but it's also really disheartening to know our culture hasn't shifted enough to a point where it becomes less common. I feel like people will be more careful about what they do and say, but it won't change their biases as long as our culture doesn't shift enough to negate a lot of the racist attitudes that are still prevailing.