No they won't, if you give them the security problem straight away, and you haven't exploited it (or if you're good at keeping anonymous), they will reward you (i've heard around 500$!)
Google does the same, check it out!
the truth is a lot of people will not want to do this because they don't want to release their identities and stuff, but i mean if you are an MIT student and you need the money to pay for education, why not?
LMAO they won't arrest you guys! It's a program they just launched, they can't arrest you when they ask you to do something and it's helping them out. Also, just because you are able to "hack" in or find a bug doesn't mean you're a criminal...there are a lot of people out there that just like to hack for fun and don't actually cause any damage to anyone or anything; they just like to find bugs to report to the owners.
Even firefox does this, you find a bug and let them know and they will pay you if it was a good find.