Suspending someone for non-school related behavior is extremely illegal.
Generally speaking, I'd be inclined to agree. I was just correcting teambpsi's error (based on not even reading the summary, which is accurate on that point) in claiming there was a threat of a lawsuit.
It's illegal, but it's illegal under entirely different laws than threatening a bullshit lawsuit. And when you want to start a fight over something like this on the internet, it helps to make that distinction.
If you were fired from your job because became a registered Republican, the Republican party would go to war for the right to represent you in court.
Which is an entirely different issue. People have rather more expansive rights regarding their jobs than students (or minors in general) do, and political activities (on one's own time) get special protection that few other activities do.
Plus, of course, good luck getting the party to actually spend that kind of money, unless you have some real connections to begin with, but it's certainly possible.