Both forms are correct. Principal and principle are two correct forms of different words. These two words are homophones, which means the words with the same pronunciation, but different spellings. Both principal and principle are pronounced as / ˈprɪn sə pəl /. Principal may be an adjective or a noun, while principle is always a noun. The origin of these words is also different. Principal comes from Latin prīncipālis and principle evolved either from Middle French principe or Latin prīncipium. Having different roots, they also have completely different meanings. In conclusion, besides shared pronunciation and similarities in spellings, principal and principle do not have much in common.

Correct spelling, explanation: an adjective or a noun, please read the definition and examples.

Correct spelling, explanation: always a noun, please read the definition and examples.

Definition of principal:
Adjective: first in rank or importance;
My principal source of income is my job in finance, but my after-hours passion is music.
Noun: a person in charge of a school or other educational institution;
My mother is the principal of a college in our town.
– a capital sum of money that is being invested and generates interest;
John inherited some money and put them as principal in the investment fund, so he can live off the interest right now.

Definition of principle:
Noun: a generally accepted rule or a basic idea that explains how things work;
This is the book about the principles of physics I was talking about earlier.
– a fundamental truth or a moral standard of behavior;
He could never have cheated on her, he is a man of principle.