Whether or not she wants to keep the receiver for now, or put together a nice small $1200 system; for only $300 she could get a new pair of B&W DM303; which would sound great in comparison with what she's got. They are also efficient, so 35 watts will be fine. They are the European loudspeaker of the year. The DM302 they replaced was a Stereophile Editor's Choice award winner.
She can spend some of the rest of the money on lots of music and some decent speaker cables to go with the DM303s. Then save up the rest for a better amp later. Those inexpensive B&Ws will really shine with better amplification.
Just bring her old speakers with you to the dealer for comparison. Audition the new DM601-S3 and DM602-S3 while you are there.