If you're teaching a class on rocket science or brain surgery, your students are probably not going to enter your classroom thinking that your class is a waste of time, or that they know more than you about your subject.
Mostly, this is true for game design as well (as long as you, as the teacher, have enough credentials to convince your students that you really do know more than them). But game design is one of those fields that everyone thinks they can do, because it looks so easy... so eventually, if you teach game design, you'll encounter a student who is convinced they know something you don't. You say something in class, and they contradict you, right there in front of the rest of the class. They insist that you're wrong, they tell you exactly why. You state your case for why you're saying what you are, but they aren't swayed. The class polarizes, with you on one side and this student on the other, and neither of you apparently willing to compromise.
And of course, game design is a living field, with varying opinions on all sides of just about any topic. So who's to say that you are right? But then, if you're not, how can you be teaching a class where you don't know the right answers... or where there might even be no right answers?
How do you deal with that?
If the point you're arguing about is actually interesting and you can think of any value in continuing, involve the rest of the class. Ask for opinions. Get a discussion going. Some of my best class moments were completely unplanned: a student once asked which was better, save points or save-anywhere, which launched the whole class into a wonderful hour-long digression that was far more valuable than the stuff written in my lesson plans. In addition to the topic itself, your students also learn how designers discuss problems in the field, whether it's in a classroom or a GDC roundtable.
If the student is hung up on some pointless minutiae like the exact definition of a positive feedback loop, exit the discussion. Defer: "I'd be happy to talk with you more about that after class today or during my office hours, but I don't want to get too caught on this one detail. We have a lot of other things to cover today, so how about you give me the benefit of the doubt and pretend that what I've just said is right, just so we can continue to talk about the other topics in class today, and we can look it up later. Does that sound reasonable?" (Bonus tip: If you ask "does that sound reasonable?" about anything, no matter how unreasonable, the other person will probably agree. Most people find it really hard to tell you to your face that you're being unreasonable when you ask.)
Warning: If you defer, make sure to follow up. Otherwise, you give the impression that you're just trying to silence anyone who disagrees with you, and ideally it's better if your class is your partner in education rather than your antagonist.
If the student still keeps disagreeing, as a last resort you can pull rank. You have the authority to send a disruptive student out of the room (worst case, by calling campus security to escort them out), if the student is getting in the way of everyone else learning. I've never had things come remotely close to that extreme, though.
Whatever you do, stay calm. Remember: if a student is arguing with you about anything, it means they're passionate about your subject (enough so that they're able to overcome the intimidation of speaking out in front of a group, and speaking contrary to a teacher!). Passion is a good thing. This student's passion might be misdirected, but it's still there, and I'd say that's infinitely better than a student who is bored, doesn't care about your subject at all, and just sits in the back quietly (or doesn't even bother to show up to class). So, consider it a victory if your students are confrontational... it means you're reaching them.