How Much Do Medical Residents Make?

Medical residents are “doctors in training.” They’ve completed medical school and have a doctor of medicine (MD) degree. When entering residency, they train for a specific medical field such as pediatrics, oncology or to become a surgeon.

By law, a senior physician must supervise medical residents, but residents often spend more time with patients than their superiors. Medical residencies often last between three and seven years, depending on the physician’s specialty.

During this time, medical residents don’t earn the six-figure salaries of experienced physicians.

How much do medical residents make? That’s difficult to answer because of the various factors that affect residency salary.

Here’s what you should expect in terms of your medical resident salary and how it might impact your medical student debt.

How much do medical residents make annually?

The average medical resident annual salary is $63,400, according to the 2020 Medscape Residents Salary & Debt Report. Medical residents’ average salary increased by 3% for the third consecutive year.

Medical residents’ annual salaries vary by specialty. Here’s a breakdown of medical residents’ earnings based on their medical field:

Like any profession, the number of years on the job also plays into how much medical residents make. A doctor in an eight-year residency earns an average annual salary of $63,400 during that time.

There’s a significant salary difference between a first-year and eighth-year resident, however. First-year medical residents earn an average salary of $57,100 versus residents in their sixth through eighth years, who earn $68,500 annually — that’s an $11,400 difference.

Related: Is Medical School Worth the Cost?

How medical resident salaries are funded

Graduate medical education (GME) funding pays for many hospitals’ residency programs. GME covers medical school graduates’ training so they can become practicing physicians. Funding comes from several sources, including federal, state and private organizations.

The federal government is GME’s biggest financial contributor. Federal funds are provided through Direct GME (DGME) and Indirect Medical Education (IME). Medicare controls both programs’ payments, so the Centers for Medicare and Medicaid Services (CMS) is essentially in charge of GME funding.

If Medicare cuts are made, GME programs can be directly affected. DGME also covers instructors’ salary and health benefits for everyone participating in the program.

IME funding covers teaching hospital compensation, supplemental residency support staff, and new technology and equipment. IME distributes funds to treat populations that are typically less healthy or in socioeconomically disadvantaged areas.

For example, many teaching hospitals have trauma and neonatal intensive care (NIC) units that often lose money. CMS will still support these hospitals with IME payments because they help underserved populations and provide opportunities to teach the next group of practicing physicians.

A hospital’s Medicare population and the size of its residency program determines how much CMS will pay.

Concerns over GME funding

The Association of American Medical Colleges raised concerns about the shortage of physicians in the U.S., which is in part due to a cap put on Medicare support for GME in 1997. Medicare doesn’t fund every residency program, but cutting it and other reimbursements could hinder teaching hospitals’ ability to subsidize funds with clinical revenue.

Congress introduced the Resident Physician Shortage Reduction Act of 2019 to address this issue. The bill’s goal is to increase the amount of residency positions available for graduate medical education payments under Medicare for qualifying hospitals.

The bill calls for an aggregate increase of 3,000 positions per fiscal year for five years. At least one-third of the positions must be for hospitals that are currently operating above applicable resident limits.

How much student loan debt do medical residents have?

Almost half of the medical students surveyed in the 2020 Medscape Residents Salary & Debt Report owe more than $200,000 in medical school loans, and 24% owe $300,000 or more. That is a lot of medical school debt to have while earning on average $63,400 for three to seven years.

The good news is there are a lot of high six-figure salary opportunities after physicians complete their residency. Surgeons can earn between $390,000 to $500,000 annually, while doctors in non-procedure-based specialties like internal medicine or pediatrics can earn a salary in the mid-$200,000 range.

Managing medical resident student loan debt

Until they’re making a big enough salary to pay down student loans effortlessly, doctors in training can consider this strategy for managing student loan debt on a medical resident salary.

Med school graduates should consolidate all of their student loans into one direct loan with the federal government. The debt will become eligible for the Public Service Loan Forgiveness (PSLF) program, and every year of residency counts toward the 10 years of required payments needed to have the loan balance forgiven tax-free.

If you’re about to graduate from med school or are currently in residency, remember to submit your PSLF Employment Certification Form every year. PSLF does not automatically provide loan forgiveness once you reach eligibility. You have to apply every year you work for a nonprofit institution for 10 years.

Related: Why Refinancing During Residency Is a Bad Idea

The ideal income-driven repayment plan during residency

One benefit of federal student loans is that there are several income-driven repayment (IDR) plans to make repayment less of a burden. The Revised Pay As You Earn (REPAYE) program is one type of IDR plan that’s often a good option for med school graduates.

Under REPAYE, your monthly payments are set at 10% of your discretionary income.This repayment plan helps keep your monthly payment down as you complete your residency — which is especially helpful if you plan to apply for PSLF or will be a resident for seven to eight years.

Figuring out the right approach to student loan debt can be challenging, but you don’t have to do it alone. Student Loan Planner® has a team of consultants ready to help create a student debt strategy tailored to your specific needs and financial situation.

If you already have medical loan debt and need help navigating your repayment plan, we can help with that, too. Schedule your consultation today.

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