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Throughout the books, Draco Malfoy refers to Muggle-borns as Mudbloods, sometimes openly, in the midst of a large crowd of students.

Especially in the early books, before the return of Voldemort. The time when the word is first introduced, it is impressed upon how unusual it is for anyone to use it.

“No one asked your opinion, you filthy little Mudblood,” he
spat.

Harry knew at once that Malfoy had said something really bad
because there was an instant uproar at his words. Flint had to dive
in front of Malfoy to stop Fred and George jumping on him, Alicia
shrieked, “How dare you!”, and Ron plunged his hand into his
robes, pulled out his wand, yelling, “You’ll pay for that one, Malfoy!”
and pointed it furiously under Flint’s arm at Malfoy’s face.

_{Harry Potter and the Chamber of Secrets, Chapter 7}

Later, when Mrs. Norris is petrified, he goes to the extent of publicly commending whoever did it, and using the word again.

Then someone shouted through the quiet.
“Enemies of the Heir, beware! You’ll be next, Mudbloods!”
It was Draco Malfoy. He had pushed to the front of the crowd,
his cold eyes alive, his usually bloodless face flushed, as he grinned
at the sight of the hanging, immobile cat.

_{Harry Potter and the Chamber of Secrets, Chapter 9}

There were probably no teachers around just then, but they appeared immediately after. Given that this was before Voldemort returned, how did he get away with this without any consequence?

Especially as this is a school setting, how is it that no one did anything about it?

We see that it mattered a lot to Dumbledore too.

“Yeah, I got the idea from them,” said Malfoy, with a twisted
smile. “I got the idea of poisoning the mead from the Mudblood
Granger as well, I heard her talking in the library about Filch not
recognizing potions.”

“Please do not use that offensive word in front of me,” said
Dumbledore.

Malfoy gave a harsh laugh. “You care about me saying ‘Mudblood’
when I’m about to kill you?”
“Yes, I do,” said Dumbledore,...

_{Harry Potter and the Half Blood Prince, Chapter 27}

Why was this not taken more seriously?

In particular, this is strongly aligned with the views of those on the Voldemort's side, so wouldn't those in power be determined to stamp out all traces of his influence on the wizarding society?

We also know from Bob Ogden's memory, that discrimination based on blood status was already non-existent in wizarding society before Voldemort's time, some 60-70 years prior to Harry.

“Ar, that was Morfin,” said the old man indifferently. “Are you
pure-blood?” he asked, suddenly aggressive.
“That’s neither here nor there,” said Ogden coldly, and Harry
felt his respect for Ogden rise.

_{Harry Potter the Half Blood Prince, Chapter 10}

As for other students reluctant to report, aren't there prefects like Percy Weasley, ready to report any minor infringement?

They were kinda distracted by the opening of the Chamber of Secrets.

As Bellatrix says, the teachers weren't around when Draco made his very public comment. We know that Draco knows better than to pick a fight in front of a teacher.

“Who’s that?” said Malfoy, taking an automatic step backward as he spotted Lupin.

“New teacher,” said Harry, who got to his feet, too, in case he needed to hold Ron back. “What were you saying, Malfoy?”

Malfoy’s pale eyes narrowed; he wasn’t fool enough to pick a fight right under a teacher’s nose.

“C’mon,” he muttered resentfully to Crabbe and Goyle, and they disappeared.
_{(Prisoner of Azkaban, Chapter 5, The Dementor).}

There's no doubt that if they had heard him then he would've been in trouble. The term probably wouldn't be enough to arouse accusations that Malfoy supported Voldemort. It wasn't even necessarily against the rules. It was rather described as being extremely rude and unpleasant. It was offensive more than dangerous.

As soon as the teachers arrive on the scene, though, their main priority is working out what has happened to Mrs Norris and in deciphering the message on the wall. They didn't know that Malfoy had used Mudblood and even if a busybody like Percy had told them they would have other priorities. This is entirely understandable. Teachers like Dumbledore who were around the first time the Chamber was opened would've been well aware of the seriousness of the situation. A brutal attack using Dark magic had just occurred. That was their priority, not disciplining Malfoy for using bad language.

After the immediate aftermath of the attack it's conceivable that someone could've told the teachers about Malfoy's language. However, this probably never happened. After all, the school was gripped in a climate of fear and suspicion. People were probably reluctant to talk to the teachers about this sort of thing lest they be suspected of being involved somehow - or lest the true Heir should hear about them grassing and make them the next target. Harry considered telling Dumbledore about the language but was too scared to do so in the end.

Harry waited nervously while Dumbledore considered him, the tips of his long fingers together.

“I must ask you, Harry, whether there is anything you’d like to tell me,” he said gently. “Anything at all.”

Harry didn’t know what to say. He thought of Malfoy shouting, “You’ll be next, Mudbloods!” and of the Polyjuice Potion simmering away in Moaning Myrtle’s bathroom. Then he thought of the disembodied voice he had heard twice and remembered what Ron had said: “Hearing voices no one else can hear isn’t a good sign, even in the wizarding world.” He thought, too, about what everyone was saying about him, and his growing dread that he was somehow connected with Salazar Slytherin...

“No,” said Harry. “There isn’t anything, Professor...”
_{(Chamber of Secrets, Chapter 12, The Polyjuice Potion).}

Out-of-universe, this is one of those cases where a term is described as being rare at first when it's actually quite commonplace. It's similar to the way in which Polyjuice Potion is presented initially as this obscure, fiddly potion in some old textbook that nobody's heard of. It actually turns out to be a very common method of disguise throughout the later books. Presenting Mudblood as this beyond-the-pale, taboo word ups the ante and makes its usage more emphatic/dramatic. The shocked responses of the Gryffindors when he uses it the first time clue us in that Mudblood is viewed by reasonable people to be a pretty dirty word. Whilst it was shocking to many who didn't exhibit blood-purist tendencies, I doubt that Malfoy was exactly the first person to have used it at Hogwarts.

Because he wasn't dumb enough to say it in front of teachers, and no one decided to tell them.

Most of the teachers would certainly be upset with Draco calling other students Mudbloods, but they'd have to know about it before he could do anything about it. Some of the other students would have been upset with him as well, but that doesn't mean they necessarily would tell the teachers. Ron was furious with Draco for saying it, but his reaction wasn't to report Draco, it was to fight him. Other students might have been upset that Draco said it, but neither report or try to fight him. Most students generally don't want to be thought of as tattletales, so especially for something relatively small like using offensive language, would have probably just ignored Draco.

Using bad language in a school setting wouldn't be that hard to get away with. If it was that difficult, then there would be a lot less instances of school bullying. The only reason why it might be harder to get away with using bad words in Hogwarts was if there was magical prevention set up, like some sort of charms that either punished students who used the term, or automatically notified the teachers. However, it seems unlikely that there was anything like that, so getting away with bad language would be about as easy as getting away with it in any other not-magical school.

Or perhaps he did get punished for it? The books span multiple school years, and Hogwarts is pretty huge. I wouldn't think they would punish him incredibly severely though, as the teachers clearly have rules against using magic to punish students such as when Moody turns Draco into a ferret, he gets told off almost instantly, and rather sternly. I suspect all they'd do is give him a stern word, and perhaps get him to write some lines with a normal pen or give him a menial job like sweeping out the dormitory. Draco though is clearly shown to be a stubborn bully, so for him perhaps those punishments weren't enough to change his mind.

Also, add to that - The next escalation a school would do is tell parents, however his father is a Death Eater, so I wouldn't suspect he'd be too phased by Draco saying that (and probably encouraged it to an extent).