ETA: I agree 100% with Missy F and she said it way more concisely than I did!
Original:
Oh boy honestly, I think you handled this all wrong. She's 17. I get it - my SD will be 17 in a few weeks and my oldest son is 16. I'm right where you are.
Here's the thing though - she'll be an adult in less than a year.
There is nothing illegal about a 17 year old and 21 year old dating.
By making him "the forbidden fruit" and pulling a "my way or the highway" on her, you're driving her to him. Sure, you can take away everything she has, and then what? How high to do raise the ante before you realize that this is destructive and insane?
Last spring, my son was dating a girl who was a year older than him and lives in another town. I wasn't terribly fond of her but I welcomed her into our house, tried to get to know her, and brought him to her house to hang out (neither one of them drove). I could tell he was really, really into her and that they were probably going pretty far pretty fast despite having almost no true time alone (at least at my house, who knows what her parents ignored). Well he snuck out with her one night and I caught him. I punished him - hard - for that. No cell phone, no iPad, no social life for up to 6 months (most privileges were restored in 4 as a reward for good behavior). What I didn't do was forbid him to date her, even though she was clearly not good for him (orchestrated the sneak out, was committed to a psychiatric unit for 10 days, was calling at all hours of the day and night, etc.). He needed to come to that realization on his own. It took about 6 weeks of not seeing her (as he was grounded) for him to realize that this was not a level of drama and craziness that he was ready for, so he broke it off with her. He learned his lesson and came to this realization *on his own* so it wasn't "us against them." He felt that I trusted him to figure this out and made a good decision, and that I didn't treat him like a child and decide for him who should be in and out of his life.
I think you need to take a deep breath, have a sit-down with you, your husband and your daughter and start over. You have to give her a voice. You have to give her a safe place to talk about the people who interest her and why. There are ways to express your concerns in a way that validates her feelings and doesn't also tear down this guy, which would make her be defensive of him. There are ways to make her come to the conclusion that while this guy might be really hot, or interesting, or different, or seems to be mature, is "a man," etc. that it just doesn't make sense for them to be in a relationship like that at this point in her life, and that she should trust that if it's "meant to be," he'll be there when she's out of high school. If you're worried about sex, chances are that if she was in a long-term relationship already that that bridge has been crossed. If you haven't had a mature, open conversation about birth control, now is the time.
What you can and should discipline, of course, is her poor choices with texting this guy to the detriment of her school work. You can use that as a clear example that her hormones are in overdrive here and are pulling her away from her usual focus and good decision-making, and let her know that until she can prove that she can be trusted to only text during appropriate hours, you will take her phone during school and at night. Same thing with the car - until you can trust her to be where she says she is going to be and isn't sneaking around, privilege lost.
All that said...I wouldn't make her quit a job over this. Give her a chance to prove that she can make good choices. If it continues to be a problem, then you can reconsider.
FWIW, I know a lot of perfectly nice people who dated with a similar age gap. A lot of smart, responsible, focused girls are very mature and a lot of younger guys are immature. One of my brothers dated a 17 year old when he was 21 and it was fine as he was taking classes, working and he was still living at home. Testing the waters is totally normal and once she's in college, she can and will do whatever she wants. Loosen the reins within reason, keep the lines of communication open and let her know that we all make mistakes (especially in lust/love) and that you trust that she can calm herself down and make good decisions about school and her other responsibilities.
FWIW, it's OK - and valuable - to change your mind about things. It's OK to say "I've calmed down and have given this some thought. I reacted very strongly in the moment because I was upset and I think that X wasn't very helpful, so let's try Y instead" and then move on.