Um, well, this is where I usually tell people to wash and dry their gauge swatches in the way they will the sweater, because this is what usually tends to happen.
That way, you'll have less stitches to expand after washing, and it will bloom to it's correct size.
But, I'm not talking to her, so could you ask her if she did that? I have a feeling that's definately the problem. You can run a sewing machine stitch up the side and then cut off the excess.
But it isn't the yarn's fault.