Combination Chemotherapy With or Without High Dose Cyclophosphamide and Recombinant Interferon Alfa-2b in Treating Patients With Previously Untreated Stage I-III Multiple Myeloma

Inclusion Criteria: * Patients must have a diagnosis of multiple myeloma confirmed by the presence of: * Bone marrow plasmacytosis with \>= 10% plasma cells or sheets of plasma cells or biopsy-proven plasmacytoma * In addition, at least 1 of the following ancillary criteria must be documented: * M-protein in the serum * M-protein in the urine * Radiographic evidence of osteolytic lesions (generalized osteoporosis qualifies only if the bone marrow aspirate contains \>= 20% plasma cells) * Patients must have measurable disease; the following will constitute measurable disease; tests used to document measurable disease must be done within two weeks prior to registration; a bone marrow biopsy performed =\< 6 weeks prior to registration is acceptable; Note: If present, all of these parameters must be followed for response * Serum M-protein \>= 1.0 g/dL by serum protein electrophoresis * Urine M-protein (light chain) excretion \> 200 mg/24 hours by urine protein electrophoresis * Measurable plasmacytoma(s) of soft tissue (must be biopsy proven) * Bone marrow plasmacytosis \>= 20% * Patients must not have been previously treated with chemotherapy; prior treatment of hypercalcemia with corticosteroids, bisphosphonates, or other agents does not disqualify the patient * Patients refuses entry or is ineligible for S9321; Note: S9321, "Standard Dose Versus Myeloablative Therapy for Previously Untreated Symptomatic Multiple Myeloma" has priority over E5A93; patients with previously untreated multiple myeloma should be entered on S9321; patients who are ineligible for or decline entry to S9321 should be entered on E5A93 and E3A93 if eligible * Patients treated with local radiotherapy to \> 15% of the bone marrow area are ineligible; patients who require concurrent radiotherapy should have entry to the protocol deferred until the radiotherapy is completed; if, in the physician's opinion, the delay in systemic therapy would itself pose undue risk, the patient may be entered and receive concurrent radiotherapy; in this situation, for the first VBMCP cycle, Melphalan, BCNU and Cyclophosphamide should be given at 75% of the dose * Patients with Stages I, II, or III disease according to a modification of the clinical staging system by Durie and Salmon are eligible; staging should be based on values obtained at the time of diagnosis unless patient has had a more abnormal value prior to supportive treatment, transfusion, etc.; include only values obtained prior to initiation of protocol treatment * Pretreatment x-rays must be done within 6 weeks of registration; copies of the bone x-ray reports are required and must be submitted with on-study forms * Bone marrow slides must be submitted * Absolute neutrophil count (ANC) \>= 1,000/mm\^3 * Platelet count \>= 50,000/mm\^3 * Creatinine =\< 5.0 mg/dL (NOTE: Patients with creatinine 2.0-5.0 mg/dL may be admitted to this study but must receive altered doses and schedules of therapy) * Patients requiring dialysis are not eligible * Bilirubin =\< 2.0 mg/dL * Serum glutamic oxaloacetic transaminase (SGOT) =\< 2.5 x upper limit of normal * Alkaline phosphatase =\< 2.5 x upper limit of normal * No myocardial infarction within previous 6 months, no significant arrhythmia within the prior 3 months; if hypertension is present, it should be under control prior to study entry * Patients with a history of congestive heart failure or myocardial infarction must have a normal myocardial ejection fraction as determined by echogram or multiple gate acquisition (MUGA) scan * No patient with angina requiring nitrates or beta blockers, or with a history of thrombophlebitis or pulmonary emboli within the previous 6 months and currently requiring anticoagulants * Patients with concurrent reversible conditions, e.g., infection, hyperuricemia, cord compression, hyperviscosity syndrome, central nervous system (CNS) complications, or renal disease may be entered into this study after appropriate therapy for these complications is initiated and the condition is controlled; therapy must be fully documented and dated on the on-study form; Note: Hypercalcemia patients may be entered directly on study and may receive corticosteroids, bisphosphonates, or other agents as needed for control of hypercalcemia; Note: Anemia patients may be entered directly on study and may receive erythropoietin (epoetin alfa: Procrit, Epogen, Aranesp, etc.) or other agents as needed for control of anemia * No smoldering multiple myeloma, nonsecretory myeloma, localized plasmacytomas, monoclonal gammopathy of undetermined significance (MGUS), or primary systemic amyloidosis (AL) * No patient with second malignancies except: those treated with surgery alone who are disease free \> 5 years or patients whose only other malignancy is non-melanoma skin cancer or carcinoma in situ of the cervix * Patients \>= 70 years must have a performance status of 0-2, and be specifically evaluated by their physician to determine if they can tolerate either regimen; they should not enter the study if the physician feels that they would be unable to tolerate either regimen * Female patients of childbearing potential must have a negative pregnancy test documented before entering this study; these patients must be provided adequate guidance about birth control measures; lactating women will be ineligible * Pre-treatment baseline Eastern Cooperative Oncology Group (ECOG) Performance Status must be assessed * Patients that are known to have acquired immune deficiency syndrome (AIDS) are excluded from this trial because the safety of the agents on this population has not been established * Participation in E3A93 is mandatory for all patients in E5A93; patients must be registered separately to each protocol, first to E5A93, then to E3A93; NOTE: Study participants from South African institutions are exempt from mandatory registration to E3A93 due to costs and problems associated with international shipping * Patients must give written informed consent