Made an account just to post here since this is weird and I've already invested some time in trying to get things working. (Spoiler alert: I didn't.)
I spent about an hour combined talking to Apple and T-Mobile on the phone. Based on what others are saying, it definitely sounds like it's an account type thing, though I have a regular account (~18 years old) and have had no problems doing this in previous years.
Apple ultimately couldn't get me an answer but sent me to T-Mobile since the issue is when confirming the carrier through them. T-Mobile sent me to a tier-2 tech who did a pretty extensive review and ultimately suggested waiting until Friday and trying again because there's no reason this should be occurring since this already is a regular account (and always has been).
The T-Mobile tech said T-Mobile's launching a similar program on Friday (Forever Upgrade or something like that), but with a two-year cycle—no option for one-year. Maybe that's a fit for some who can't get this to work.
I'm not in any huge rush, so I'm going to give it a try early next week sometime, hopefully once Apple and T-Mobile are talking to each other and figure out what's going on, then if it still doesn't work, just buy out my current IUP device, pay in full for a new one (using my current device as a trade-in) and use it as a hand-me-down in the future.