Germie:
1. As a current grad student, I can tell you that it very often happens that hierarchies develop within departments leaving unfunded students feeling less-than their funded peers.
2. Unfunded students are less desirable candidates for PhD programs than funded students. As well they have less access to research & teaching opportunities.
3. So, giving up a 2nd ranked school offer to take a 5th ranked school offer makes almost no sense unless you are not planning on going on to PhD and/or you are sure that there are a lot more jobs in your field than there are graduates from schools ranked 1-4.
4. You will be studying too much during the semester for it to matter where you live, but if you really really don't like living out at Purdue you can take out loans for the summer & winter & go somewhere cool. And even trips to Aruba every winter & Praque every summer will still be less $ than paying tuition & living expenses in Seattle.