Kiel attended Columbus East High School in Indiana, where he was rated the #3 quarterback in the nation by Parade. Coach Richard Dangles offered him a scholarship to the University of Notre Dame, where Kiel earned the starting quarterback job during his freshman year, four games into the 1980 season. The team achieved a 9-0-1 record and the #1 ranking before closing the season with losses at USC (20-3) and to Georgia in the Sugar Bowl (17-10).
Kiel went on to become the sixth all-time leading passer for Notre Dame, and holds the record for the team's longest pass play—a 96-yard bomb to Joe Howard against Georgia Tech in 1981. In his final game, he led the unranked Irish to victory over 13th-ranked Boston College in the Liberty Bowl.