We develop a statistical mechanical lattice theory for polymer solvation by a pair of relatively low molar mass solvents that compete for binding to the polymer backbone. A theory for the equilibrium mixture of solvated polymer clusters {AiBCj} and free unassociated molecules A, B, and C is formulated in the spirit of Flory-Huggins mean-field approximation. This theoretical framework enables us to derive expressions for the boundaries for phase stability (spinodals) and other basic properties of these polymer solutions: the internal energy U, entropy S, specific heat CV, extent of solvation Φsolv, average degree of solvation 〈Nsolv〉, and second osmotic virial coefficient B2 as functions of temperature and the composition of the mixture. Our theory predicts many new phenomena, but the current paper applies the theory to describe the entropy-enthalpy compensation in the free energy of polymer solvation, a phenomenon observed for many years without theoretical explanation and with significant relevance to liquid chromatography and other polymer separation methods.