Paulsen played hockey at the University of Minnesota from 1938-41 and was an All-American in 1940 at left wing alongside fellow teammate John Mariucci. He was team captain as a senior in 1940-41 finishing his career as Gopher hockey's all-time leading scorer, a record that would hold for the next 25 years. He was selected for the 1940 U.S. Olympic Hockey team, but due to WWII those games were cancelled. With boyish looks, and a small stature, Paulsen earned the nickname "Babe" during his playing days in high school and college.