Troubleshooting Assignment Issue for Custom Permission Set with a "Modify All Data" System Permission to Users for A Few NonProfit & Education Products

If you have installed one of the NonProfit & Education (formerly known as Education Cloud) products mentioned below, you may run into an error while assigning a custom permission set that has the 'Modify All Data' system permission enabled:

• Student Success Hub
• Admissions Connect
• Grants Management
• Nonprofit Cloud Case Management

Error: Can't assign permission set <permission set name> to user <username>. This permission set contains an object that requires a license'. Before continuing, assign the user to the related permission set license.

Steps to Reproduce:

• In a Salesforce instance that has one of the following packages installed:  Grants Management; Student Success Hub; Admissions Connect; Nonprofit Cloud Case Management. 
• Go to Setup -> search for and select 'Users' in the quick find box and click 'New' to create a new test user (example name:  Test User)
  • Assign the user the 'Salesforce' license.
  • Assign the 'Standard User' profile. 
• While still in Setup search for and select 'Permission sets' in the quick find search box and click 'New' to create a new permission set. 
  • Create a permission set with the Label 'Modify All Data'.
  • The API Name will auto-fill.
  • You can leave Description and 'Session Activation required' blank.
  • Make sure you leave the License value as '--None--'.
  • Click 'Save'.
• On the 'Modify All Data' permission set screen scroll down and click on 'System Permissions'. 
  • Click the 'Edit' button 
  • Enable the 'Modify All Data' permission by clicking the checkbox on that line (this will auto-enable other system permissions.)
  • Click the 'Save' button and 'Save' again on the 'Permission Changes Confirmation' pop-up.
• On the 'Modify All Data' permission set screen click the 'Manage Assignments' button.
  • Click the 'Add Assignment' button.
  • Check the box next to the 'Test User' and click 'Next' and then 'Assign'.
• Confirm you receive the error. Error: Can't assign permission set <permission set name> to user <username>. This permission set contains an object that requires a license'. Before continuing, assign the user to the related permission set license."