Plagarism by a co-author in my paper I recently submitted a manuscript for review to a journal. The manuscript was a result of an independent study and therefore, had 8 authors (students, advisors and a few other relevant collaborators). I am the first author and am also a student.

One of the student co-authors wrote a paragraph that stood out as irrelevant to me and had some unique wording so I edited it out. Yesterday I was doing some literature review for a different project and reread a paper that was cited in the recently submitted manuscript and found that the paragraph I edited out was copied word for word from this paper. I remembered the paragraph due to the unique wording.

I am very glad that I edited it out and avoided plagiarism accusations. Should I report the plagiarism to this student's advisor (she was the second author on the paper and I work very closely with her, though she is not my advisor)?
I would suggest you try education first. Point the other student to the paper you found and remind them that copying without citation is plagiarism. Perhaps they just aren't yet aware of the academic rules if they are new at this. But, say that had it gotten into the paper it would reflect badly on everyone. 

If you get pushback, rather than an apology, then you can think about reporting it to your own advisor. Let them take if further if needed. 

My answer would probably be different if there were an advisor-advisee relationship between you. But for people not your supervisor you can try a low-key approach first.