LORELAI: Dad, she wants to go to Harvard.
RICHARD: Well yes, because she thinks you want her to go to Harvard.
Richard hits it right on the head – where did Rory’s obsession with going to Harvard come from, except from Lorelai? Lorelai bought Rory a Harvard sweater when she was only four: not the usual clothing a toddler asks for on their own.
Richard is also correct that she’s too young to have set her heart on one specific college to attend. There are other good options available, and as Gilmores traditionally go to Yale, he would be able to help Rory get in as a legacy student. He does know more about the Ivy League system than Lorelai, who, despite being determined to have her daughter fulfil her dream of going to Harvard, has seemingly done little to educate herself about the process of being accepted there.
Harvard and Yale are traditional rivals, and it can’t have escaped Richard’s attention that Lorelai has rebelled against him by choosing his own alma mater’s main competition as her preferred university. He is tactful enough not to say that to her, though.
Richard is actually giving Lorelai good advice here. He probably shouldn’t have brought it up while he’s a guest, but at least he makes sure he doesn’t do it in front of Rory.