This pair of words is one that many people learning English struggle to remember—in fact, it’s very often mixed up by native speakers as well.
Principal has several meanings. The first is the one that school children surely know: “the director of an American public primary (elementary) or secondary school (high school).” Principal can also refer to any leader, or person who has responsibility—even for a crime. Additionally, it can refer to the money that you first put into an investment (which is responsible for the gains). Finally, principal can also be an adjective, meaning “most important.”
A principle is a general law or idea about how things work or how one should behave, such as the principle of relativity, or the principle of fairness—a general, fundamental idea, moral, or natural law. As in these examples, principles can be complex ideas, such as “the principle of ‘do unto others as you would like others to do unto you.’”
American school children are taught to remember the difference between principal and principle by saying, “the principal is your pal” (pal means friend).