The unidentified girl, 12, received the money from another child who lives across the street from her parents' house in Taylor, a suburb near Detroit, Police Chief Mary Sclabassi told The Detroit News.
Administrators at The Sixth Grade Academy became suspicious Monday morning when the girl was spotted doling out stacks of $100 bills to her classmates. Some of her peers were given as much as $500, Sclabassi told NBC affiliate WDIV in Detroit.
As soon as the school principal learned of the student's generosity, she called the police. All of the money was recovered, the chief said.
"Had word gotten out to maybe someone other than some other 12-year-olds, it could have put [the student] in a dangerous position," Sclabassi told WDIV.
The girl's unidentified neighbors have claimed their money, but police are still investigating Monday's strange incident, Sclabassi confirmed to The Detroit News.
Teresa D. Winnie, the assistant superintendent for the Taylor School District, said in a statement Tuesday that local officials "do not have a specific protocol for this type of situation."
"There was no threat to the student body in the building and the matter is currently in the hands of the Taylor Police Department," Winnie said.
The Sixth Grade Academy is a public middle school with roughly 700 students