I would absolutely go with the funded offer.
I had a very similar dilemma last year. It was killing me as I dreamed of the school which offered me no funding for years. I eventually went with the fully funded offer, and never regretted it since. I am now about to start a Ph.D. programme at my top-choice school and I have no debt from Master's years!
It of course depends on your particular circumstances but, really, in the current economic climate, it is hardly advisable to take on debt for a Masters degree if you have another option. The very best to you with the decision!