This idea comes up all the time on r/space. It can't be done. The ISS is not safe out there. It does not have enough radiation shielding nor is it sturdy enough, nor would you be able to accelerate it out there, etc. Making the modifications necessary to do so would cost much more than just building a new ship.
Fuel costs would obviously be greater, but not all that much, and once there is a permanent mobile presence in near space, the fuel cost will really just be relegated to getting from the surface into orbit (which is most of the fuel cost anyway).
The reality (sad, unfortunate, or otherwise) is that getting into space is expensive, but it's ridiculously cheap compared to some of the other things the US wastes money on.
Fuel is just a small fraction of the cost anyhow. Also, you could build "cycler" craft using ion or plasma thrusters that could ferry crew modules from LEO to the moon and back.
The convenience of being on a giant rock versus a sitting duck in space can't be understated, either. It makes a lot of things a lot less complicated, especially supplying the base. The deceleration and coupling that ships to the ISS have to go through would be completely negated on the moon - all you have to do is land something relatively close (within a few hundred yards, maybe?) to the base and you're set. It's like threading a needle versus hitting the broad side of a barn.
There's a lot of valuable payloads you wouldn't have to actually land. You could ship frozen water up there in a projectile designed to keep it in a super-cold, super-hard state using liquid nitrogen as a boil-off coolant, and also clad it in armor and partially shield it from impact. Then a rover could go and retrieve the frozen water capsules. Even better, have a few shipments consist of frozen, dampened potting soil, which can be supplemented with lunar soil (made into a slurry with water and sloshed around to wear down the super-jagged edges) and start growing your own food up there with redirected sunlight. (There are a number of plants that are workably tolerant of 2 week sunlight cycles, like peas, provided you keep them cold between sunny periods.)
Less complicated sure, but much more expensive. You need a whole lot more delta-V to go to the moon (and land something with a hope of staying intact) than to LEO. It actually takes less fuel to send supplies to mars (because they can use aerobraking/parachutes to slow down) than to the moon.
>Fuel costs would obviously be greater, but not all that much, and once there is a permanent mobile presence in near space, the fuel cost will really just be relegated to getting from the surface into orbit (which is most of the fuel cost anyway).
Wouldn't it be better to work on that "permanent mobile presence in near space" first?
Low Earth orbit is a pretty good place to be; it's the easiest to get to from Earth, and it's on the way to just about anywhere.
Only it wouldn't, because the Earth's shadow doesn't extend that far out. Earth-Sun L2 is a million miles from Earth; Earth's shadow tapers to a point well before that.
Better than nothing I guess? Probably not by much though.
Actually, I was somewhat pessimistic:
Angle subtended by Earth at a million miles: (8 thousand)/(1 million) = 0.008
Angle subtended by Sun at 94 million miles: (864 thousand)/(94 million) = 0.0092
Area of Sun covered by Earth: (0.008 squared)/(0.0092 squared) = 0.76
So about 76 percent of the Sun's visible area would be covered by the Earth. The Sun would be about 1/4 as bright from L2 as it is at noon on Earth. That's still very, very bright, but there is some effect due to the Earth.
Also, it's worth noting that the most dangerous radiation in interplanetary space (solar wind and cosmic rays) is not "shadowed" by the Earth in quite the same way visible light from the Sun is. The Earth's magnetosphere does have a "tail" that extends behind the Earth, but there is radiation inside it.