(Bloomberg) -- Over the past several years, Jack Remondi, chiefexecutive of student loan giant Navient, has gone out of hisway to tout the company’s devotion to helping Americans cope withstudent debt.

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He’s mentioned it in meetings with investors, on calls with WallStreet analysts, in testimony before Congress, and even on hisMedium blog. “At Navient, our priority is to help each of our 12million customers successfully manage their loans in a way thatworks for their individual circumstances,” he said March20.

But faced with a potential multi-billion dollar lawsuit by thefederal government for not living up to that mantra, Remondi’scompany, formerly an arm of student lender Sallie Mae, sang adifferent tune in court filings.

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Borrowers can’t reasonably rely on America’s largest student loan servicer to counsel them abouttheir many options, Navient said on March 24 in a motion to dismissthe case, because its primary role is, after all, to collect theirpayments.

“There is no expectation that the servicer will act in theinterest of the consumer,” Navient said in response to thelitigation filed Jan. 18 by the U.S. Consumer Financial ProtectionBureau.

Navient says its public statements encouraging borrowers tocontact the company didn’t mean it would act in their bestinterest.

With about one in four of the nation’s roughly 44 millionstudent debtors either in default or struggling to stay current,there’s broad agreement that loan servicers such as Navientare key to ending the crisis. Remondi, 54, has said as much onseveral occasions.

One of his four ideas to slash defaults is for policymakers toencourage borrowers to call their loan servicer. “For someborrowers, student loan debt can be especially daunting. The goodnews is that borrowers can turn to their student loan servicers forhelp to navigate the complex repayment options,” Remondi said inFebruary.

But in court, Navient made clear that the company’s main jobisn’t helping debtors; it’s getting them to cough up cash forcreditors like its biggest client, the U.S. Department ofEducation.

The department, Navient explained, didn’t agree to pay for thelevel of customer service the CFPB wants Navient to give.

“This ranks among the most appalling statements I have heard inmy career,” said David Bergeron, who after more than 30 years ofworking at the Education Department recently retired as the head ofpostsecondary education. “If that’s all they are doing,” Bergeronsaid of Navient’s claim that its only responsibility is to collect,“the Treasury Department and the Internal Revenue Service would doit better.”

“What this means for the Education Department is that it needsto fire Navient,” Bergeron said. “Damn the costs.”

Patricia Christel, a Navient spokeswoman, declined to makeRemondi available for an interview. The company helps borrowers“navigate loan repayment through proven solutions,” she said in aprepared statement. In court, Navient has also sought to undercutthe lawsuit by arguing that the CFPB—under siege by aRepublican-controlled Congress and White House—is itselfunconstitutional.

Navient steered struggling borrowers facing long-term hardshipinto payment plans that temporarily postponed bills, the CFPBalleges.

In January, the CFPB sued Navient in a Pennsylvania federalcourt, alleging the company “systematically” cheated studentdebtors by taking shortcuts to minimize its own costs. Navientillegally steered struggling borrowers facing long-term hardshipinto payment plans that temporarily postponed bills, the governmentalleged, rather than helping them enroll in plans that cap paymentsrelative to their earnings.

The latter option promises debtors the possibility of debtforgiveness after years of steady payment. The former raises thepossibility of a financial time-bomb.

Navient chose the former, the CFPB said, because it took lesstime for its employees to set up. Borrowers can typically enroll inso-called forbearance plans over the phone, while income-basedrepayment plans require paperwork and lots of explanation.

In July 2013, when Navient was the servicing arm of Sallie Mae,Remondi said in an earnings call that “it’s very expensive work,for example, to enroll a borrower into something like anincome-based repayment program … which we are doing. But we don’tactually get paid for outperformance in that side of theequation.”

By pushing distressed debtors into forbearance agreements, theCFPB said, Navient’s conduct violated a federal law (PDF)banning “abusive” practices.

The Education Department and Navient repeatedly encouragedborrowers to contact the company if they had trouble meeting theirobligations, the CFPB said in its complaint. Through statements onthe websites of both the company and the government, debtors wereprodded to reach out. But when they did, Navient employeesallegedly sought to exploit their lack of knowledge and steer theminto payment plans more beneficial to Navient, the CFPB said.

The consumer protection bureau estimates that as much as $4billion in additional interest charges were added to principalbalances of loans repeatedly placed in forbearance. The CFPB seeksan injunction barring such conduct, modification of existingpayment agreements, and restitution to affected students.

“The Education Department ultimately is asking loan servicers toact on its behalf to fulfill its fiduciary responsibility toborrowers,” Bergeron said, and the government “expects itsservicers to make sure that borrowers gain access to income-basedrepayment plans.” The CFPB argued in its complaint that this wasdecidedly not the case with Navient.

“It’s a sound legal argument, but it may not be the best publicrelations argument.”

Navient has repeatedly denied the government’s allegations, pointing to how more than 40 percent of loan balancesit services for the Education Department are enrolled inincome-based repayment plans. Borrowers with Navient-servicedfederal loans are less likely to default within the first threeyears of payments than the national average, company spokeswomanChristel argued, citing the company’s internal data.

However, an analysis of the most recent federal figures showsthat 30 percent of Navient-serviced borrowers are behind on theirpayments—the worst rate among the Education Department’s loancontractors. CFPB data also show (PDF) that Navient ranksseventh on a list of the nation’s most recently complained-aboutfinancial companies.

In its motion to dismiss the consumer bureau’scomplaint (PDF), Navient argued that borrowers couldn’t“reasonably rely” on the company to counsel them about theiroptions, because federal law doesn’t require it. Furthermore,Navient said, its public statements encouraging borrowers tocontact the company didn’t mean Navient would act in borrowers’best interests. Its only legal duty is to lenders, it argued.

“When consumers call their servicers, they’re not expecting themto withhold information.”

“It’s rare for a company to be this bold,” said Jenny Lee, aformer CFPB attorney now with the law firm Dorsey & Whitney LLPin Washington. “It’s a sound legal argument, but it may not be thebest public relations argument.”

Suzanne Martindale, a San Francisco-based attorney for ConsumersUnion, the advocacy arm of Consumer Reports, said Navient’s claimraises questions as to whether borrowers are afforded their rightto apply for income-based repayment plans. Bergeron, the formerEducation Department official, and Rohit Chopra, formerly a studentloan regulator with the CFPB, added that they couldn’t recall everhearing—in public or private—a loan servicer arguing that it wasn’trequired to counsel borrowers about their options.

“When consumers call their servicers, they’re not expecting themto withhold information,” Chopra said.

If anything, a close review of Navient’s utterances outside ofcourt revealed a consistent message of commitment to helpingborrowers manage their student loans.

Last May, for example, Remondi wrote on his blog that “atNavient, we make it a priority to educate our federal borrowersabout income-driven options,” because, he explained, thegovernment’s various income-based repayment plans “are our primarytool in helping borrowers avoid default.”

Almost two years earlier, in September 2014, Remondi toldinvestors at a Wall Street conference that the typical borrowerdoesn’t know the difference between the government’s variousincome-based repayment plans. “Our job as a servicer,” Remondiexplained, “is to really work with those customers and make surethat they understand the differences and which program best fitstheir needs.”

During the Obama administration, the CFPB urged financialcompanies to reorient their culture toward a more consumer-focusedapproach, said Lee, the former CFPB lawyer. “But then there’s aperverse incentive,” she said. “If a company does too good of a jobadvertising how consumer-friendly it is, the CFPB could use it asevidence against the company—in that it created this reasonableexpectation that consumers can rely on the company.”

“It’s a really serious dilemma,” she said.

This conundrum may have ensnared Navient. “If borrowers are ledto believe that calling their servicer is useless, who benefits?”Remondi said last year. “Help is a phone call away.”

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