Wow, a lot of input! Thanks everyone!
Okay, after reading all of this I figured out my problem. I DID accidentally apply for the Visit for Marriage visa, and I have no idea how I did that but I did. I applied through visa4uk.fco.gov.uk and I guess I mixed up the options, I don't know. This makes everything MUCH more clear now, though (including that it was so much cheaper than I thought it was supposed to be). And now I'm thinking the Fiance visa was the wrong idea. I think our best option would definitely be to live together in England on a Visitor's Visa for 6 months, get married back in the US, and then apply for the spousal visa to go there. I assume I have to apply from the US for the spousal visa?
So with the Visitor's Visa, that's just the stamp that I get in immigration, correct? And I could just have a round-trip plane ticket for up to 6 months, and that would be enough to show that I wasn't lying my way through or anything? If that's the case, I don't need the fiance visa at all, because really we just wanted to live together for a while. (But don't worry, we were planning to get married within the 6 months. We just hadn't planned it yet, and we were probably going to just have a minor civil ceremony and then have a larger ceremony for our friends and family once we hit the mark where one of us had a permanent visa. We both wanted a real celebration but we don't have a lot of money, so we wanted time to save but still be together.)
A few other questions, when did you two meet? How many times have you met? Did you send any proof that the two of your physically met before? Some of this is likely to have been considered in your application.
We met a year and a half ago when we worked at a summer camp together, although the proof of that would probably be the work visa on HIS passport, which I didn't send. And last year I did study abroad in Italy, so I visited him 4 separate times, all of which were stamped on my passport and indicated on my application. And then he came here again in the summer, but again, that would be his passport. So no, there wasn't any real proof other than the stamps on my passport saying I'd flown into England. What kind of proof can I send, if I do change my mind and decide to go for the fiance visa? I feel like the only proof we really have would be pay stubs from the camp we worked at together, which I don't even know if I have anymore, and the visas on our passports.
And for those of you who were asking about the specific language of the letter:
You have stated in your application that you have not arranged a date for marriage as you are waiting until you have been issued with entry clearance as a visitor for marriage. However, it is a requirement under this part of the Immigration Rules that arrangements have been made for either the notification of the ceremony or for the ceremony to be taking place during the period for which leave is granted. As you have not provided any evidence of this or of your relationship with your fiance I am not satisfied that you meet the requirements of paragraph 56D (ii) and (iii).
Furthermore, you have provided no evidence of your intentions after marriage. You have stated that you are a student but theres is no evidence of when your studies will finish or how they will be affected by taking 6 months absence. I have carefully considered your reasons for wishing to go to the UK, your overall circumstances, including your current financial status and ties to your home country and based on these considerations, I am not satisfied that you meet the requirements of paragraph 41 (i) and (ii).
I therefore refuse your application.
I don't know why they put the part about being a student, because I wrote on my application that I graduated December 2008. It was probably just confusing because when I filled out the application I WAS still a student, and I put that as my primary occupation, but now I've graduated and I did indicate that, but whatever. Now if I fill out a new one I am not a student anymore anyway.