Kolasinac, 27, wore the royal blue shirt of Schalke from 2011 until 2017 after coming through their youth setup.
However, he is unsettled in England and according to Sky Sport is willing to return to Germany for personal reasons.
Schalke have held initial talks with Arsenal and the player’s camp about a return to Gelsenkirchen.
A loan move is the most likely plan, with Schalke in a poor financial state and working on a limited budget.
The main sticking point is Kolasinac’s salary, which could lead to Arsenal and Schalke each paying a percentage of it.
Schalke have a wage limit of €2.5m-per-season and Kolasinac earns €8m, creating an obvious problem.
At the moment, there is a lot of work to be done before Schalke can realise their dream of bringing back Kolasinac.
Bosnian international Kolasinac has made 104 appearances since joining Arsenal with a return of five goals and 15 assists.