Schmidt suffered the injury during the third quarter of the Fighting Irish's 49-39 win over Navy. He will have surgery Tuesday.
Schmidt, a redshirt junior, had been an instrumental cog in Notre Dame's defense under first-year coordinator Brian VanGorder, rarely coming off the field and helping to call most of the plays. One of seven new starters on the unit this season, Schmidt, a former walk-on, was among the biggest surprises of the Irish defense, which ranks 28th nationally in scoring average (21.6 points per game) and has helped the team to a 7-1 start.
The 6-foot-0.5, 235-pound Schmidt leads Notre Dame in tackles (65) and has two interceptions, three quarterback hurries and two forced fumbles. Schmidt has one year of eligibility left, and Kelly said he is expected to return for 2015.
"I think everybody is going to have to pick up a little bit," Kelly said. "Jaylon [Smith] is going to have to pick up. I think the defensive line is going to have to be more assertive in making sure they're taking care of their end of things. I think our safeties. I think everybody is going to have to pick up the slack for the loss of a guy that really did most of the work.
"Yeah, he's a big loss, but I think our guys understand that it's a next-man-in, and let's get young guys ready to roll."
True freshman Nyles Morgan replaced Schmidt late Saturday and will start moving forward. Morgan, from Crete-Monee (Illinois) High, was an ESPN four-star prospect from the recruiting class of 2014, the No. 5 inside linebacker in the country. Kelly said he has not decided who will be the primary play-caller for the defense.
"Certainly it generally has a leadership component relative to understanding all of the fronts and adjustments and clearly getting people lined up, so the complexities are that that position generally takes on that leadership role," Kelly said of the middle linebacker position. "If it's not -- in other words, if its given to somebody else -- the mike linebacker position can be as easy as you make it. You can be a single-gap run-supporter. You can be a hook player and you can make it really easy.
"We're certainly going to have to take some of that load away from Nyles and really kind of disperse it to others because we're not going to heap that all on him. We obviously felt good about putting all that on Joe's plate. We're not going to be able to do that with Nyles."
Notre Dame plays at Arizona State this Saturday.