The Grattan Institute's Dr Pete Goss says there is no evidence that there is any educational benefit to having Indigenous-only schools.
"I haven't seen any evidence that would say there is an educational benefit to having a school that has 100 per cent Indigenous kids, 50 per cent or five per cent," he told NITV.
Mr Goss, school education program director, said it is about ensuring every student feels like they belong in the school.
"They (should) feel safe and receive teaching that meets them at their level of need. So it's less about whether it's 100 per cent Indigenous or not, than 'do we have high expectations?'," he said.
He said there are challenges any time there is compounded disadvantage.
"When we have a lot of students who have challenges at home that they bring to school, the job is going to be harder."
Mr Goss' comments come after a new push for private schools to create Indigenous-only campuses was put forward to the Federal Government.
"Its important that this is not being seen as some form of charity but a genuine pathway with genuine choices".
In a pre-budget submission, the Association of Heads of Independent Schools of Australia sought separate satellite campuses for Indigenous students for funding purposes.
The proposal could benefit from hundreds of thousands of dollars in extra tax-payer funding, attracting maximum government subsidies.
Association CEO, Beth Blackwood, said there is already evidence of the benefits.
"The evidence to date is that they make a significant difference in the literacy and numeracy outcomes for those primary school students allowing them to go into mainstream secondary education," she told NITV.
If the proposal was accepted by the Federal Government it would mean a private school with a separate campus could significantly boost its funding.
Under the current system the federal government offers schools subsidies for each Indigenous student.
Based on this proposed model, subsidies start at 20 per cent per student, rising as the proportion of Indigenous students increases, ultimately delivering 120 per cent per student in an all Indigenous school.
Two schools in New South Wales are already running Indigenous only campuses.
Darkinjung Barker College on the state's Central Coast is at the forefront and sees a separate Indigenous campus from its parent school, Barker College.
Sean Gordon from the Darkinjung Local Aboriginal Land Council said the campus provides choices for students.
"All we've done is provide our community and our kids with a choice, a choice of an alternative education partnering with an elite school," he said.
Gawura School in Sydney's inner-city was separated from St Andrew's and is now registered as its own entirely Aboriginal school, meaning it attracts the highest possible rate of additional funding from the federal government.
While Pete Goss from the Grattan Institute welcomes interest to help close the education gap, he warns satellite campuses could create segregation if schools cherry-pick only the best and brightest.
"It may be a really good thing but those students can't be made to feel like second-class citizens. They have to over time be given the all of the opportunities that that school has to offer. So, its important that this is not being seen as some form of charity but a genuine pathway with genuine choices," he said.
But Ms Blackwood said the proposal is not about segregation.
"These communities do not work unless there is a strong relationship between the parent school and the Indigenous community, they are working together," she said.
Meanwhile, the Federal Government, who is planning a major overhaul of school funding, seems to be backing away from the proposal.
Education Minister Simon Birmingham said in statement the government is, 'already providing more than $270 million in additional loadings for Indigenous students this year'.
The question is will more money going into to private education for a few really lift overall education standards.
Well-respected educator Chris Sarra said a good education happens when good teachers understand the community their students come from, and teach them with that background in mind.
"As a school teacher I may not have control over the whole school culture, but I can control the culture of my classroom and the relationships with children that exist within it. But I've got to understand, and I've got to understand this very well. That those relationships will not be the best that they can if I only perceive them to exist behind the walls of that classroom," he told NITV.
Mr Goss said needs-based funding has to be part of closing the education gap.
"Money needs to flow where students have the greatest challenges and then it needs to be spent well. At the moment we're still arguing about whether that is going to happen we need to get past that argument."