The Malaga coach insists he can empathize with the 32-year-old's position at the club and says he should be playing regular first-team football.
The Spain international No.1 was forced to watch from the sidelines yet again as los Blancos opened up their la Liga campaign with a 2-1 victory over Betis on Sunday, with Diego Lopez continuing to be preferred in goal following his impressive displays last season since joining the club in January from Sevilla.
And former Madrid boss Schuster can empathize with Casillas' position at the club, even saying he would be unsurprised if the 32-year-old decided to leave Carlo Ancelotti's men to ensure he is selected for Spain's World Cup side next year.
"I'd understand it if Iker wants to leave, but on the other hand, he's a hugely symbolic player," Schuster told Tiki Taka. "It was impossible to imagine Raul at another club, and it's the same with Iker, but this year there is a World Cup and he cannot afford to spend a year sitting on the bench. He has to play.
"We need to remember that Iker went out of the team because of an injury and the coach replaced him with a substitute. Because of an injury, the player has the right to return to the team. Diego Lopez has played well for Madrid and the team needs him."
Casillas was ousted by Lopez while Jose Mourinho was still coach and, despite coming back from a broken hand, was unable to force his way back into the first team following a string of strong displays by Lopez.
However, with a new season underway and a new coach in charge of Madrid, Schuster is baffled by the club's decision to keep the saga ongoing and believes Casillas should be reinstated as first choice shot-stopper.
"Being the Madrid goalkeeper is a very difficult job and Iker is who he is, and a player as good as him cannot afford to be in a situation like this one," he added. "I don't understand it. Even though there is a lot of competition, which is a good thing, Iker needs to be playing.
"The reason it's a problem is that, as we saw last year, this isn't any old player. We have already started discussing this issue this season and it dominated the last few months of Mourinho's tenure, it was unbelievable, it's not good for the team nor for Iker.
"It has surprised me that this situation has been allowed to rumble on, the club needs to find a proper solution."