You have raised a number of issues here that indicate that you need a consumer attorney to defend you.

If this is truly a collection agency that is suing you, a good consumer attorney can beat them about 90% of the time.

If the lawsuit was filed in the wrong county by a debt collector, you may have a lawsuit against them for violation of the federal debt collection laws.

It sound like the case was filed in the court of common pleas arbitration division. This is as binding as it gets, its real court. Contact my office for a free consult, or contact another consumer attorney. You need to defend this case.

I don't handle educational loans at all. I am not familiar with TERI loans, although it seems to be a private loan as opposed to a federal student loan. Which is a good thing! As to why you were sued in Lycoming rather than Northumberland, I can only guess. Read the loan documents. They may contain a choice of law/forum selection clause. If they require all suits to be brought in Lycoming, then you are stuck. Was the original lender located there?

Unfortunately, yhour wife co-signed the loan and this is always a bad idea. If the primary borrower defaults, then the co-signer is liable.

The statute of limitations should apply, although there is no statute of limitations for federal student loans. Are you sure this is a private loan? Again, review of your loan documents might help.

It sounds like you have been sued in arbitration. When did you receive the complaint? You only have 20 days to answer or raise any objections.

I do not handle litigation at all in PA, given my geographic location. If you have valid defenses to the complaint, then consult with Attorney Artim or another attorney in Lycoming or Northumberland County (look for an attorney who specializes in defense of loans or credit cards). Sokme attorneys give freee consults.