Guess in the grand scheme of things they're not that bad for
foreigners though as they seem to have paid for the problem to go away for her.

I do wish her well, but she is still working illegally. A few years ago I would be confident that she would have no problems for the duration of her stay in China, given the apparent strength of her school's relationship with the police. But during the past year in Shaanxi and Chengdu and several other areas the hammer came down, surprising everyone including the provincial police.

Make sure she saves enough money to pay a fine and buy a ticket home, just in case.