Seconding the option of having the counsellor address the awful situation that your daughter’s friend and family, and your daughter and family, experienced.
Your daughter does not have to write about the situation directly at all if it will be upsetting to her. College essays don’t need to address every impactful event in a person’s life.
This is a situation where the counsellor can address this more fully.
My child, while not in the situation your daughter and her friend unfortunately have been in, has also had to find resilience at a price.
I am very sorry to hear about this.