Control What Your Users Can Access --> Can't assign permission set due to license constraints

Hello! Hoping someone can help me with the challenge for the "Control What Your Users Can Access" module. I've made it all the way to the step where we're asked to "Assign the permission set group to the user you created in the previous unit." When I do that I'm met with the status message seen in the following screenshot. I don't recall this being a step required in the previous module when creating that user. Any ideas on what I should do?

For context: I'm following the module order here.

Challenge Instructions:

#Trailhead Challenges