The 87 pupils from Hamburg were on a trip in rural Saxony, east Germany, when the attack took place, the Welt newspaper reported.
A group of the pupils aged 14 to 15 from Goethe Grammar school snuck out of their hostel to go to a nearby village party on Friday night.
The fete itself, celebrating the hamlet of Ostrau's 888th birthday, was advertised around the area and caught the eye of some of the pupils.
But the party was a hotbed of far right activity with the number 88 being significant in Nazi circles as H is the eighth number in the alphabet – 88 stands for HH, Heil Hitler.
Despite teachers banning them from going, the group, mostly aged around 15, were stopped by 12 men in a car park at around 3am, after enjoying the festivities, the Welt reported.
They then followed the schoolchildren through the town, until they had reached the youth hostel where they were staying. According to the teachers, three of the men came into the building with the children.
One pupil, who has not been named, told the Welt that he had woken up to use the toilet, when he heard a commotion downstairs. He entered the toilets, where the three men followed him, throwing him into a urinal.
One boy, a 15-year-old of Chinese descent, was reportedly beaten so badly that they broke his eye socket and jawbone. He was taken to hospital and has been in intensive care since Sunday.
After the attack, the neo-Nazis stood outside the building shouting “NSDAP! We will never forget”. The NSDAP, National Socialist German Workers Party, was the ruling Nazi party during World War II.
Police arrived half an hour after the attack – despite, the Welt said, the station being just three kilometres away. They have arrested nine suspects and launched an investigation.