She is testing her boundaries and figuring out who she is for herself, which may be a different person from who you expect her to be. I think this is totally normal. Many many students go a little crazy their first semester or two, and then find a happy medium. And I think if you try to crack down too much, it will backfire on you.
That said, if you are paying for school, you do have some control. You can make it clear to her that she is there to get an education and keep her grades up. You could set a trigger point on her first semester GPA, and if she get below, for example, a 2.5, she will have to move home.
The other thing you can do is encourage her to be involved on campus. Students who have their spare time occupied by student government, theatre, clubs, and other organizations don't have as much free time to get into trouble. So if you know she had these types of interests before, encourage her to seek them out on campus. If she mentions any interest in these types of groups now, even if she didn't in high school, encourage it. She can find friends who are focused on more worthwhile things.
Don't lose faith in your daughter. Right now it's most important for you to convey to her that even though her current behavior isn't consistent with your values, you HAVE faith in her, and that you trust that even though she is going through this testing phase, once the newness of college wears off, she'll think through her decisions and make good ones for her future.