It does. Depending upon where she earned it and how she did with it...
Let me put it this way, if your Masters was from University of Chicago and involved a rigorous thesis project, with reviews from professors, and had you do actual research that would help prepare you for this position, you got good grades, etc then sure.
BUT you not having any work experience at all is still worrisome

The internships could be helpful though. It's just hard to say. This is one of those things that comes down to cost AND meeting both people to make a decision. You've got to be able to figure out who would work better in your office, who would learn better, who would integrate into the flow of things.
They'd both get an interview from me but I can't rule either person out.
Her edge comes down to what type of salary she'd be willing to take, what her expectations were and what her competition was like.
She wouldn't be on the top of the pile by any means just because she got an Masters. You can spit and find people with a Masters degree these days. You gotta have an edge.