Yeah, I hear you, and for each circumstance its different. The thing for me is that I'll be going to a school where not everyone goes on to the PhD and its not even automatic, after you finish your MA there is an internal application process (although to be honest I'm not sure if this exists everywhere?). I wonder if students at that point also send out external applications?
And I do love my program, love the fit, and love the city, and the faculty. The prestige is only a factor b/c the funding is mediocre. Since it is a small, liberal, theory heavy department, not much money comes in. So there will be some loans I need to take out - and while this is fine for 2 years, I don't know if its sustainable for 5-7+ considering the market. But I do know many graduates do have success finding jobs either as the niche theory professor in a department or internationally.