If the choice were mine I'd remove option B from consideration and just wait on my top 2 schools for as long as is reasonable. The grad school application process is not fun, and to have to go through the same process with no guarantee of an offer is going to be a bummer.
If you don't get an offer from your tops schools, option A sounds like an incredible second choice - one that you'd be happy with (debt aside). Try to look at the debt this way - you're paying for an overall experience. You'll get to live in Europe, build an international network, leverage your international experience in job interviews at home, etc. If you're enjoying yourself, the course content, the people/faculty you might be more inclined to get involved and have some more doors open that way. There seems likes more opportunity to get inspired here.
I understand the debt level would be significantly less to go with option B, but have you considered your mental health? Living an "unenjoyable" life for an additional 3 years...it takes a toll. Yes, you'll get the credential - but what about the network and other opportunities of engagement? Are you going to want to get out and explore and attend events/panels if your environment makes you want to stay in bed? Where will the one year internship be located? If it gets you out of there then I understand why you might want to consider it, but to work and school in a place you are miserable at just doesn't make sense to me. I personally value my mental health more.
Location was a big factor in my decision. I'm from Vancouver, BC, but have moved to Victoria recently for a job. I've applied to schools in Vancouver (SFU) and Victoria (UVIC), and was accepted to both. Although UVIC is significantly cheaper, shorter in length, and has more co-op opportunities - the city or school doesn't have a lot going on in terms of events/networking opportunities. SFU is much more costly, but I'm very interested in community engagement and I know SFU has ample opportunity with various links and partnerships across Vancouver.
With either option, you'll come out with a degree. But just because you're qualified for a job doesn't mean you get the job. Your network/connections/experiences and how your market all that is what matters. So I guess I'd say go with the option you know you could make the most of.
Good luck!