I discussed this with some fellow CFIs. We figured if a student was having trouble with English, the training would not go well, and we would not be signing them off for a check ride.

So what would be the need to report a student with problems with English to the FAA? It's not an issue until its time to sign the 8710.
Besides, I know a few people (pilots) that have problems communicating, whether it be in English, Spanglish, or jibberish.

T