What is the term for featuring a real person as a character in a story? Or in other terms, writing about a real person?

Their crust? Oh, their crush. You're not going to reveal names, right? That would make a bad situation worse. The crush would be crushed by the name calling and teasing. They may crush the crusher with a libel suit, or make it known around school that the poor puppy can only dream of love but is incapable of winning hers. Let the story die unread, or advise your friend to pull it from circulation. It could bite back one day.

I don't know of a term for inserting real people into a fictional tale. Roman a clef? No. I don't think that's it.

If you write about someone without written permission it can be termed as libel,slander, or defamation of character.

The legal term is libel, since it's in writing.