Don't be paranoid. Even unrelated people can have genetic defects in their children. If there is a cousin marriage once in a while no medical doctor has proven it single handedly cause defects. Only way to be sure is to do premarriage screening. my cousins are doctors (in USA), i am sure they know. If your family does not have defective genes then the children will never get it. Royal families of England and muslim countries have more defects because of frequent cousin marriage.
Normal risk versus increased risk. It's all a game of statistics sweetheart. Ask your 'USA doctor cousins' to explain it to you.
These two statements are unrelated. Actually the increased risk of genetic problems from consanguineous marriages is proven beyond any doubt whatsoever. It is a bad idea that had its origins before genetics was understood, established mostly to preserve property, power and lines of inheritance. Genome scale screening options are improving with every day that passes, however they are still not powerful enough to offer guarantees. Screening works only for known, single-gene ailments with an established genetic basis. Everything else is a probabilistic argument based on partial information. Genetic components of complex diseases are very poorly understood. Marrying a first cousin is a genetic gamble, the most serious adverse consequences of which are deferred to the next generation - i.e. a child that had no role in the decision-making. Thoughtful people try to avoid that sort of thing to the extent they can.
OP, just change the conversation saying that the boy will be well educated, handsome, blah, blah and will get a much better bride. Just praise the boy and that he deserves better and will get much better alliance.
My SIL had a daughter last month and she brought this up(hopefully jokingly) and I said in that case as dowry they shud proly raise my son and the education expenses would be on them, afterall they wud want their son-in-law to be well educated. She did not bring this up after that :biglaugh