This is the first time I've heard about this.. In the US our Master's degrees are unfunded and actually quite expensive, although they sometimes involve research too.
How does it work? I assume you're doing this in the UK?
There are many ways to get funding as a grad student for Masters in CS the US: most commonly via Teaching or Research Assistantships that not only pay your tuition but provide a stipend as well. Its true that MOST masters are not funded, CS seems to be the exception. All my peers in college who decided to pursue a Masters degree in CS had some sort of funding which reduced their expenses by a LOT.
I've got friends who are doing PhDs in computer science(in UK) and they both had to do a Masters course first - but they have funding for the whole duration, including the masters course. I actually work as a C++ programmer, and they both make more than I do, doing a PhD is very well paid, at least in Computer Science.
rarely is PhD well-funded in the UK. You're not living well at at all, and TA positions are not the norm as in the US. The US has much more money for these. Even in CS, the people you talk of must be very lucky with rare, google-level/industry-funded positions.
Most PhD listings I've seen offer around £15-18kpa plus remission of fees.
But there are a lot of incredibly badly paid software/technology jobs in the UK, so it's not at all impossible for someone to be earning less than that in industry.
My friends are each making £30k per annum, the stipend itself is 25k but they make at least 5k a year just marking exams and giving practicals. With it being tax free, it's easily equivalent to a job paying £35-40k(they are both at a Russel Group university).
I, on the other hand, make £25k per annum, and that's before tax :P
Well, I don't live in London. My fiancee also works in IT, she makes 30k per year, and we can easily afford to rent a 4-bedroom house, have two cars, and save enough each month to get a mortgage in a couple years. I really like my job and I'm comfortable financially, so why would I need a new job, especially if it meant moving to the crazy city like London. No, thank you.
I'm in Canada. We have both course-based Masters and research Masters in Computing Science. The course-based ones almost never have funding available and are quite expensive, while the research ones are more competitive but well funded and act like mini-PhD's (at least that's my general experience).