Both forms are correct. Principle and principal are both correct forms of two different words. Principle and principal can be described as homophones, which means two words with different spellings, but the same pronunciation, in this case, / ˈprɪn sə pəl /. They vary when it comes to the function in the sentence, both can act as nouns, but principal can also be an adjective. In the end, these words have different meanings, which is visible in their roots, because they evolved from other sources. Principle originates either from Middle French principe or Latin prīncipium and principal from Latin prīncipālis. To sum up, besides being homophones, principle and principal are not very much alike.

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

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

Definition of principle:
Noun: a rule of conduct or a basic idea that shows how something works;
The principles of democracy were established in ancient times.
– a moral rule or a general law that describes the good behavior;
I have my principles, so you should already know I would never lie to you.

Definition of principal:
Adjective: highest in order of importance or value;
My principal reason for changing school was the problems with other kids.
Noun: a head of school or other similar institution;
I hope I will get the promotion to the principal position soon.
– a sum of money used to be invested and generate additional income;
While making an investment, you need to be aware that you take the risk of the possible loss of the principal, not only a chance to gain interest.