I explained more throughout the thread

I said it irritated me because he randomly came up to me while I was on campus. There was no joke, setup, or double meaning. It was him randomly calling me a nigger.

Then there's no excuse for it. 

... Unless he thought you guys were close enough to use "nigga". But that's super subjective in use, and if it were true that you were that close he would know you don't like it.

I usually don't mind racist jokes being thrown against me. One of my favorites I've had thrown against me is 'goat f****r'. I can usually shake it off since the joke usually relates to a topic that I could be discussing and the people who use it tend to be pretty cool people. In your case however, where offensive jokes are purposefully shoved into my face just to be offensive, I would be pissed too. Not because I find it offensive... but that I don't want myself associated with people that would be mocked for joking about such sensitive subjects and having no self reflection upon the topic what so ever. It's better you left the dipshit before he pissed you off too much and ruined your reputation around other people.

Some of the comments here are ridiculous.

So an asshole can be an asshole, but you should treat him like he's fragile? No! You shake him and say "Hey! You're being a goddamn asshole. Stop it!"

People never grow up if you let them indulge in such childish, douchey behavior

Something I'll say that will shock anyone who reads my post..

You're on the right side of this. He needed to be called out and quite frankly if you didn't call him out his punk ass would have continued that repugnant garbage. I joke with my friends and we often joke on the edgy, racist, sexist, trolling side towards each other however if you haven't built a bond with someone to joke like that then expect to be verbally shut down or entirely shut out when you cross that line.

Sounds like your senses of humour aren't similar (or similar enough), and he read you poorly (or ignored your opinion). You should probably have let him know earlier that you don't find his jokes funny instead of suddenly exploding, but beyond that, it's his fault. Even if you are to blame, it's no big deal: People make mistakes all the time, and it's no big deal. You didn't act with bad intentions. Instead, it sounds like you got somewhat emotional in the heat of the moment, and that's perfectly normal. Just try to learn from your mistakes (and fix them if possible but if not, you shouldn't worry either).

In case it sounds like I'm blaming you, I'm not. At the very least, the other guy misread you and at worst, he was a jerk.

You really have nothing to be sorry for, Mr. Layton. You sound a bit like the person that takes back an abusive relationship. You're kind in spirit, and as such you started blaming yourself with time. That's not a bad quality, but be aware it can cause you problems and allow you to be taken advantage of. Forgive him, stay his friend, that's all good. But don't for a second think that you are to blame.

It's just some stereotype used against Indians and Arabs. I think it has to do something with many Indians being vegetarian. I'm just surprised that I haven't got any stupid comments about being an illegal immigrant since I look more Mexican than Indian. 

The world is full of dark humor, prejudice and even flat out racism. Remember i said the world...not just America. We freely judge other cultures..but who are we to say ours is right. We don't know what pain others are feeling and we don't know where some people come from. You can only forgive and maybe inspire people with your compassion and culture so that they may do the same as you....you cannot attack someone with it. You cant just say i am the high ground and you need to do as I do because your speech offends me.

When I moved into my college dorm my views on everything changed. I lived with white, black, Hispanic, Laotian, chinese, japanese, pakistani, jewish, german, african, indian and Vietnamese. The most condescending and closed minded group of people were not just the white students...but the liberal white students. They are more certain of what right and wrong is ..then a christian student and even more willing to call you out on not following their ideology.

Sure some of these cultures were different...had different senses of humor and sometimes even the darkest senses of humor that you would this is derived of pure hate. But everyone grew up in different places with different problems and different hardships. Is it our place to tell people what to say and not to say. Should we tell him what to think or what he shouldn't say around you. If he's physically hurting someone you know tell someone. If hes saying stuff you don't like ignore it or don't laugh.

Who are you to judge? Maybe in his mind and culture hes not being an asshole.