Because the higher it is the more fuel you need to get there.
Since a rocket also needs fuel to carry fuel, the fuel requirements are not linear. So the rocket would need more fuel which would make everything more expensive.
Also, if there is an emergency the crew can get into the escape pod and be back on earth faster than from a 1000km height.
In addition to everything already said regarding ease of transit and fuel, there’s also the issue of radiation. The reason solar radiation isn’t an issue here on the surface of the Earth is because the Earth’s magnetic field shields us and protects us from the worst of it. That shield extends into space, *but only so far*. The radiation environment at 400 km altitude is a little worse than on the surface, but not by much. Out at a few thousand kilometers altitude its orders of magnitude worse though. This would be an issue for both the astronauts, as well as all the equipment on the station itself.
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