Application of information technology has changed the work of engineers. Products, processes, and knowledge are handled in comprehensive and sophisticated computer systems. In these systems, engineering objects are described, related, and communicated using wide range of latest advancements in computer and information technology including intelligent computing. Recently, Internet portals organize work of communities of engineers. Because computer methods and tools change frequently, lifetime education of engineers is essential. For this purpose, engineering systems have means for continuous education and training. An experimental engineering portal has been established in the Laboratory of Intelligent Engineering Systems (LIES). It represents integrated product related engineering including modeling, simulation, manufacturing, product data management, knowledge management, communication, and multi site management of project work. As an integrated functionality, and using facilities provided by powerful engineering system, a higher education functionality is being conceptualized in the LIES. As the methodological background for education, an approach and method for virtual classroom by the authors is being implemented. Competences in BSc and MSc courses as they are collected from recent industrial engineering technology represent the primary expected advantage of this solution. In this paper, the problem of bridging the gap between higher education and engineering functionality is discussed. Previous works in the area of computer system based higher education and by the authors are introduced. Following this, functionality of engineering system and virtual classroom are compared and concept of Integrated Engineering and Higher Education (IEHE) is proposed. Classroom model by the authors as associative set of structure, content, teaching process, and assessment entities is explained. Next, competence extraction as taxonomy controlled modification of topics in courses, construction of classroom model as object related actions together with relating and constraining of objects, and handling of capability and human intent originated conflicts are discussed. Finally, an experimental laboratory system for product lifecycle management (PLM) system and integrable functionality of the engineering system are concluded as implementation issues.