I've got no experience on this, and I'm certain my advice is useless. Sooo that's your caveat.
I say option 3. (There is not enough information to answer this question). What would you be doing on your year off? How would a year off impact existing loans? Would taking time off depress you? Why do you want the PhD? Etc.
I say do not pay for a PhD- if you can do something really cool on this year off. Travel, Research, Teach, anything. Not only will it help you grow as a person (touchy feely stuff there) but it'll make you more competitive for funding next year.