Chronologically speaking, this scene follows Coping With Death and Discussing Dan's Transition. If you haven't seen those, I suggest you do before you check out this one because you'll have more context.
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Plymouth Whitemarsh high school was Dan's world. He loved going to school. When he was ill he would hide his symptoms and feign health in order to attend class. In 2005, Dan's friends and classmates graduated. He stayed at PW one more year because he could stay in public school until he turned 21. Therefore, in 2006, all his friends began college while he attended high school one final year. At the Class of '06 PW Picnic, he really only knew the faculty and staff. Had it been the Class of '05 Picnic, he would have been the star of the show. After all, they'd voted him king of several of their dances. Dan made due at the '06 picnic, of course. Once he was able to obtain his yearbook he found a way to fit right in.