My concern wouldn't be the under age sex issue..
If they want to, they are going to do that whether you allow overnights or not, they'll find a way.
I think the problem is that overnights in a home with just young adult supervision, probably parties - it could end up in a situation where she wants to come home at whatever time.. and feels she can't say so, can't leave, can't call you etc etc.
If you have a way around that, if they live close enough, if you talk it through with her, then maybe allowing 1 overnight per week or some similar arrangement may be suitable.
She probably does like the idea of 'playing house' a bit, and she may well find she does NOT like the reality of a house full of young adults being dicks (because lets face it, we all were at 20 ish and I'd been running my own household 3 years by that point!)...
If then you are confident she will ask for help if needed, she will call, leave, etc - a 'some nights a week but not ALL' might give her the chance to dip her toe in that water safely.
If she won't talk that through with you or if she squirms about and you feel she wouldn't ask for help or get herself out of there if things got unpleasant.. then say no to overnights - but things can go unpleasant in the day time too...