LUKE: Jess, this is serious. You’re flunking out. You’re looking at being in the eleventh grade for the rest of your life. You’re gonna be the kid in the back of the room with a beard and a Racing Form babbling incoherently about Steely Dan.
The Daily Racing Form, usually referred to as a “racing form” or just a “form”, is a tabloid newspaper which publishes statistics and past performances of racing horses to use as a betting guide. It was first published in Chicago in 1894.
Steely Dan, previously discussed.
Luke’s weirdly specific description of the “kid in the back of the room” suggests that he is basing it on an actual young adult who was held back at Stars Hollow High during his own school years.