The unnamed girl, 12, told police that she received the money from her friend who lives across the street from her parents' house in Taylor, a suburb near Detroit, US.
Alarm bells were raised at The Sixth Grade Academy after news reached the school principal that the girl had been spotted handing out $500 bills to some of her classmates and $200 to others.
The school principal quickly called the police and all of the money was quickly recovered.
"Had word gotten out to maybe someone other than some other 12-year-olds, it could have put [the student] in a dangerous position," said police chief Mary Sclabassi.
The money is currently in the hands of the local police, although the girl's unidentified neighbours are claiming it is rightfully theirs.
"We're talking with the family about how this happened and we're glad that this ended safely for her and that it was retrieved," said the police chief.
If the girl in question is reading this, my sons are very nice and polite and would love to have you round for a play date. Don't forget your backpack!