Thanks for writing to AlterHeros.
I’m glad to know you are concerned with your students’ homophobic talks. Unfortunately, some teachers aren’t at all; some are even telling homophobic jokes in their classes!
You wrote in your question that you are reacting to your student’s talks and that you tried to explain to them that homophobia can harm others but also themselves. It’s good that you explained the consequences that homophobia may have on them (for example, in their carrier) because it could make them think about it. Maybe you could explain to them what “fag” and “gay” really mean and that they use these words in a wrong way. You could also try to make them realize how someone who is homosexual can feel when he or she hears teens using the word “gay” as synonym of stupid or unpleasant.
I advise you to visit the Safe @ School project website. It could help you and give you ideas. You could also ask a local organization to come to your school to demystify homosexuality and homophobia by workshops and/or kiosks.
Good luck and don’t give up.