Doing a MA / MSc in your hometown despite the fact that it's not challenging? Couple of years ago, I have been in a situation where I almost had to make a decision whether to wait for an opportunity to come in the future, or to do a MSc in my home city which was average (if not below average) in quality. Luckily, I managed to win a scholarship and did my degree abroad, on a well equipped and well-known university.

However, if a candidate keeps being rejected the necessary scholarships for him to do MSc abroad, is the MSc program really worth it despite the fact that you know you won't get a good knowledge at your homecity University? Should a student that wants to do a MSc or MA degree in a chosen field do the MSc at home despite the fact that his home institution is not 'scientifically well-situated'*? 

*In lack of better words, here I mean that the department at the home University has lecturers that aren't really knowledgeable. Also there are not (m)any international collaborations and there is no possibility for you to be challenged because nobody knows the new methodologies you are planning to use.
Something is better than nothing. 

If a student, for whatever personal reason, needs the degree either now or never, he should always take the local program. If it is possible to wait a year, study, retake exams or makeup weak grades, do that and then reapply everywhere. But if it's "that" local degree or nothing, go for the degree. 

Any weak degree is a bummer, but it still opens doors. It instantly creates eligibility for a new tier of jobs nationally and internationally. It makes one eligible for teaching, supervisory roles, and for PhD programs. If a student goes in knowing the program is weaker, he or she should have a self-defense plan. Supplement classes with productive personal projects. Perhaps working cross-discipline with a stronger local department. Example: my university has a weak biology department and high quality mathematics/statistics department. I recommend the bio students become experts in non-parametric tests and try to get method-specific publications to give themselves leverage. 

Other ways of making the best of a bad degree is to find the one or two good quality advisors who will 'understand,' getting an internship, attending conferences, joining professional student organizations and using them to build contacts.

Admittedly, this answer could be modified in the face of age, family commitments, and financial hardship of the student in question. In the majority of cases, however, the 'weak' educational investment would still pay the greatest dividends.