I had Saya refer to Biscuit as a "Gaikokujin" which is a more formal term for "foreign-country person." Gaijin isn't really a "bad term" it just means "outside person" but some do feel it has gotten bad rep for some reason. Both are neutral terms but gaikokujin is mostly heard in the media and by the government, while gaijin is just used as an everyday thing.