Understanding students’ learning experiences is valuable for educators to correctly manage and adjust students’ expectations towards their learning [1], especially when working in a challenge-driven learning environment. Moreover, within higher education exploring undergraduate students’ expectations and preferences in teaching, learning, and assessment can support teachers in exploring different learning methods and techniques, which can reduce the gap between theory and practice, creating a balanced and engaging learning environment. Current challenges in higher education include reducing the gap between academia and industry, using challenge-driven learning, flipped classrooms, and student-centered learning with real-life problems has become a method to deal with such challenges. However, such approaches do not come without new challenges, such as an increasing gap between the student’s practical approach to completing a specific project, and the general theory essential to the profession. This study aims to gain a deeper understanding of students’ perspectives and expectations when learning theoretical aspects of software engineering in a challenge-driven flipped learning environment over a period of 6 months at a 25% learning pace, the learning environment also consists of several different elements including student peer learning and incremental assignments. By benchmarking student-learning expectations during several surveys, what can be indicated is that students’ expectation early in a course relies mostly on presumptions based on previous course assessments and students’ current knowledge. Early results indicate that student learning preferences and expectations include that 75.6% of the students expect to learn as much as possible new things about software development via solving real-life problems. As a conclusion, the results indicate the driving forces behind utilizing challenge driven in an educational learning environment and the potential obstacles met by learners. Relies mostly on the learner’s expectations, therefore, managing these expectations has the potential to reduce the barriers between theory and practice, which can lead to creating a balanced learning environment.