Same here. First though, I didn't apply to be a mentor until I was sure I could be of a great deal of help to others. I learned as much as I could from my mentor and from chatting with other mentors before I ever even applied. If I don't know when a person's ready then I wouldn't personally feel comfortable mentoring. Thats just me though, I like to be extra, extra sure of myself. However, do ask them if they want to stay. I'm about to graduate some students at the same time and some are ready and some are not even the tiniest bit ready, but I believe most of them will choose to go on, ready or not. I still done my part though and I do hope some of them will stay just a bit longer so I'm able to give as much help as possible. They're all already upgraded to advanced though. However, if you feel they're not at all ready, you should say so. They may not know that they aren't ready. I plan to say something like "I think you could really improve even more if you stay a bit longer, but no hard feelings if you're ready to move on." All you can do is offer your best help and it's up to them to take it.
Determining if they're ready or not? Well, when they submit reviews to you do you need to send it back and have them correct errors? If they're only a couple of small, tiny errors no biggie, but if you're having to make a list, that student is not ready and as a mentor, you should let them know that. This is just how I feel though. I would want someone to tell me if they thought I wasn't ready. A student who truly wants to do well, will welcome any advice like that. Just be very kind about it.
Best of luck!