In the neopagan tradition of witchcraft an elder is a Witch who has garnered a high level of respect from others due to his/her experience and skill in the Craft. Elders have the role of aiding in policy decisions and interpreting craft traditions and laws within a coven. Starhawk (Miriam Stimos) says 'there is no hierachy of rule. Elder witches can and do give advice, but only those within the coven may actually make decisions.'(Quote from her essay on Witchcraft and Women's Culture.)
Any Witch can be an elder provided they have the right attributes - they do not necessarily have to be of the third (highest) degree of rank; first degree witches may be accepted. Generally though, elders are third degree Witches because they play such an important role in the coven.