I fail to see where the principal is to blame. But yes I think expulsion would be appropriate. I think too they can kiss any scholarship offers goodbye.
Ooops I typed before my brain had time to work. I should have written “suspension would be appropriate” For some reason I was thinking that expulsion did not always mean a permanent ban from attending school, my mistake.
These are not ignorant children. They knew even with the asteriks the word they meant to convey and that it would be deeply offensive. Had they done this in a way that could not be associated with the school I would defend their right to be offensive idiots and argue against any punishment. But this was done (as far as I know) on campus. So suspension is appropriate.