Depends on what you want to do. If you're interested in academic jobs, then it's in your best interest to go to a better ranked school. Otherwise, I'd say take your funded PhD offer, and enjoy your grad experience ~$20,000 richer and with no debt.
I really think your best option in to strengthen your profile and reapply if you're really concerned about the schools you got into. How sure are you that you'll be able to transition to PhD? If the GRE is keeping you out, then you'll have the same problem when you need to reapply.