You'll have to differentiate between folklore and folk musicology. While they are related, they are two different fields. If you're primary focus is to be on folklore, then Indiana Unversity is quite good (the created the term and study of "jokelore" there, for example). The University of Pennsylvania is another excellent school for folklore studies.

But if you want to focus on the musical aspect, you'll probably have to go elsewhere.

(I'm assuming you're in the US.)