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Explanation
The Joke
At a graduation ceremony, an administrator tells a student named Steve that she can "come clean" with him now: he did not actually go to real college. He was part of an experiment at a "Placebo University." She explains that he appeared to be in college, but he got falsely inflated grades, was allowed to pass tests by gaming them and wheedling professors, and got good marks for essays on books he never read.
Steve is devastated, stammering, "But, but I... Wow, it seems so obvious now. My God, my God, what a waste." The administrator then cheerfully says, "Just kidding! Here's your diploma," and Steve immediately bounces back with a jubilant "Woohoo!"
The Humor
The joke works because the "Placebo University" description is indistinguishable from many people's actual college experience. The administrator's supposedly shocking reveal -- inflated grades, gaming tests, bullshitting essays -- sounds exactly like what a lot of students actually do to get through school. Steve's horrified realization that it was all fake is funny precisely because the "fake" version and the "real" version are the same thing. The final beat, where he happily accepts his diploma despite having just acknowledged it was all a sham, highlights how the credential itself matters more than the education it supposedly represents. The comic satirizes the gap between the idealized purpose of higher education and the reality of how many students actually experience it.