How do I tell my mentor that I liked my internship but am not yet sure about coming back?

I loved my internship this summer-- however, it’s located in the same place that I’ve lived my whole life. Location is very important to me, almost as much as the company itself. I’ve told my mentor that I’ve loved my job this summer, etc, and she’s said that if I want to come back, to just forward her my resume.
I’m also considering doing an accelerated master’s degree at my school, the 4+1 for mechanical engineering. Again, the only thing holding me back from it is having to stay in the same place for another year. I want to go out, and explore new places, and get a chance to be independent and have a career. That being said, I know the 4+1 is a good option, and I don’t want to squander it.

I have one week left at my internship, and during this week, I want to ask my mentor a few questions:

  1. Can I use you as a reference, if I'm applying for any other positions?
  2. Can I still keep in touch with you as a mentor?
  3. If I choose to come back, when do you need to know by?

Any thoughts?

You certainly have good concerns, as well as opportunity. So congrats on that. I would suggest to just be honest with your mentor, discuss your options and perhaps any uncertainty you have about staying or leaving. You might leave open whether you return to work for her again in the future–you never know. I am sure your mentor will understand, appreciate your maturity, and want you to keep touch with her and update her on your academic and life adventures.