But if you read the OP, the student is a “she”.
ANd the family “fled the holocaust”. We can assume it means they are Jewish, but it could possibly mean someone was a member of the SS. Regardless, some of the "ethnicity questions that have been posed to “test” affiliation (for lack of a better word) are: Do you identify as XXXXX? Do you speak XXXXX in your home? Do you belong to clubs/organizations that are associated with this ethnicity? Etc. These are the more ethical tests of whether the OPs friend “should” mark yes. She might feel a bit awkward if she is invited to a minority campus visit weekend or invited to interview for a minority scholarship. Yes, her selection of “yes” to Latina is explainable, but …