Since I dont know the complete case details, it would be helpful to talk to a good lawyer.
In short, she has to maintain legal status. Else it can trigger a 3 year or 10 year ban.
She can definitely go on F1 visa even if she has masters degree. If she is on F1 visa, she can maintain legal status. This may be the best option. A good lawyer can review your complete case details and provide best guidance.