The former Manchester United and England forward does, however, believe that there is a way back for the youngster at Anfield.
The forward is looking increasingly likely to leave Anfield having failed to agree a new deal at the club despite months of talks with his representatives, and his potential transfer is already building up to be the saga of the summer.
And Cole says he thinks Liverpool will hold out for at least £40million before considering a sale to a Premier League rival.
“If I was Liverpool, I would want at least £40million to sell to a potential rival,” he said.
“[I] suppose they’re just testing the water, however I think Liverpool will sell at the right numbers. People say what’s his value but value is whatever someone will pay for you.”
At this moment in time, it seems Sterling is almost certain to leave Anfield at some point, with a number of Europe’s top sides reportedly holding an interest in acquiring his services.
The situation is becoming very similar to the one that surrounded Luis Suarez the season before last, with the Uruguayan ultimately staying at the club and nearly leading them to the Premier League title after demanding a move away.
And Cole says although it will be hard for Sterling to return, there is 'always a way' in football.
“It will be tough for him to go back to Liverpool but there is always a way back in football,” he added.
“It all depends on both parties and that both parties want for the future. What we do know is that Sterling is an exciting English prospect and I hope if he does leave Liverpool it is for regular football so he can continue to develop.”