The current grading rate is
(30 minute)/(5 papers) = 6 minutes/paper.
She has 3 hours (or 180 minutes) to grade 35 papers.
She now has 180 - 30 = 150 minutes left, and she has 35- 5 = 30 papers left.
The remaining grading rate is
(150 minutes)/(30 papers) = 5 minutes/paper
Therefore she must work at 1 minute/paper faster to complete grading 35 papers in 3 hours.
Answer: She should work faster at an increased rate of 1 minute per paper.